pac - review of ag's rpt no 7 of 08 - parliament.act.gov.au · 1 act legislative assembly,...

S T A N D I N G C O M M I T T E E O N P U B L I C A C C O U N T S

Review of Auditor-General’s ReportNo. 7 of 2008: Proposal for a gas-fired power

station and data centre—site selection process

F E B R U A R Y 2 0 1 0

Report 6

i

Committee Membership

Ms Caroline Le Couteur MLA Chair

Mr Brendan Smyth MLA Deputy Chair

Ms Joy Burch MLA Member to 19 November 2009

Mr John Hargreaves MLA Member from 20 November 2009 (Mr Hargreaves did not participate in any committee deliberations relating to the report)

Secretariat

Ms Andréa Cullen Secretary to 5 October 2009

Mr Glenn Ryall Secretary from 29 October 2009

Ms Lydia Chung Administration

Contact Information

Telephone: 02 6205 0142 Facsimile: 02 6205 0432 Email: [email protected] Post: GPO Box 1020 Canberra ACT 2601 Website: www.parliament.act.gov.au


ii

Resolution of Appointment1

The ACT Legislative Assembly appointed the Standing Committee on Public Accounts on 9 December 2008 to:

(i) examine:

(A) the accounts of the receipts and expenditure of the Australian Capital Territory and its authorities; and

(B) all reports of the Auditor-General which have been presented to the Assembly;

(ii) report to the Assembly any items or matters in those accounts, statements and reports, or any circumstances connected with them, to which the Committee is of the opinion that the attention of the Assembly should be directed;

(iii) inquire into any question in connection with the public accounts which is referred to it by the Assembly and to report to the Assembly on that question; and

(iv) examine matters relating to economic and business development, small business, tourism, market and regulatory reform, public sector management, taxation and revenue.

1 ACT Legislative Assembly, Minutes of Proceedings No. 2, Tuesday 9 December 2008, pp. 12–13.

R E V I E W O F A U D I T O R - G E N E R A L ’ S R E P O R T N O . 7 O F 2 0 0 8 : P R O P O S A L F O R A G A S — F I R E D P O W E R S T A T I O N A N D D A T A C E N T R E - S I T E S E L E C T I O N P R O C E S S

iii

TABLE OF CONTENTS

Committee Membership ........................................................................................... i

Secretariat ................................................................................................................ i

Contact Information .................................................................................................. i

Resolution of Appointment ...................................................................................... ii

R E C O M M E N D A T I O N S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V

1 I N T R O D U C T I O N A N D C O N D U C T O F T H E I N Q U I R Y . . . . . . . . . . 1

Terms of reference ..................................................................................................1

Conduct of inquiry....................................................................................................1

Advertisement..........................................................................................................2

Submissions ............................................................................................................2

Public hearings ........................................................................................................2

Structure of the report..............................................................................................2

Acknowledgements .................................................................................................3

2 A U D I T B A C K G R O U N D A N D F I N D I N G S . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Audit background.....................................................................................................5

Audit objectives and scope......................................................................................6

Audit opinions and key findings ...............................................................................6

Audit recommendations...........................................................................................7

3 A D M I N I S T R A T I O N O F S T R A T E G I C P R O J E C T S I N T H E

A C T : T H E N E E D F O R S U P P O R T I V E S T R U C T U R E S A N D

P R O C E S S E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4 N E W D E P A R T M E N T O F L A N D A N D P R O P E R T Y S E R V I C E S

… … … … … … … … … … … … … … … … … … … … … … … … … … … … … 1 9

5 G O V E R N M E N T I N T E R A C T I O N W I T H T E R R I T O R Y O W N E D

B U S I N E S S E S A N D T H E I R C O M M E R C I A L P A R T N E R S . . . . . 2 1

6 C O M M U N I T Y C O N S U L T A T I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5

Provision of information to the community.............................................................30

Consultation in the planning process.....................................................................33


iv

7 L A N D U S E P L A N N I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1

Land valuation and alternate uses.........................................................................41

Strategic land use planning for the ACT................................................................54

8 W H O L E O F G O V E R N M E N T W O R K I N G . . . . . . . . . . . . . . . . . . . . . . . . . 5 7

Whole of government working ...............................................................................57

Successful whole of government working..............................................................59

Outcomes of whole of government working...........................................................60

Appropriate budget and accountability frameworks...............................................62

9 C O N C L U S I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5

A P P E N D I X A : L I S T O F W R I T T E N S U B M I S S I O N S . . . . . . . . . . . . 6 7

A P P E N D I X B : C O M M I T T E E P U B L I C H E A R I N G S . . . . . . . . . . . . . . 6 9

A P P E N D I X C : A U D I T R E P O R T R E C O M M E N D A T I O N S . . . . . . . 7 1

A P P E N D I X D : A D D I T I O N A L C O M M E N T S F R O M

B R E N D A N S M Y T H M L A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5


v

RECOMMENDATIONS

R E C O M M E N D A T I O N 1

3.7 The Committee recommends that, in the case of strategic projects, a

complete business case be prepared before the project is formally submitted to the

ACT Government.


3.14 The Committee recommends that the Government release the strategic

criteria and facilitation process policy for public consultation, and that it modify the

policy if necessary.


4.3 The Committee recommends that the Department of Land and Property

Services develop a comprehensive communication plan as a way of informing all

stakeholders—internal and external—about its role.


4.4 The Committee recommends that Government clearly defines the

respective responsibilities of the Department of Land and Property Services, the

Land Development Agency and the ACT Planning and Land Authority in regard to

project facilitation to avoid confusing overlap. The Government should also clearly

outline how these agencies will interact with each other.


5.9 The Committee recommends that the Government develop guidelines

outlining clear processes for all dealings and communications with territory owned

businesses and their commercial partners, such as ActewAGL. The issue of who it

is appropriate to copy into emails should be addressed in the guidelines.


6.18 The Committee recommends that the Government continue to refine

community engagement guidelines and to consult the community about them.


6.19 The Committee recommends that, as a minimum, the Government adhere

to current community engagement guidelines when consulting with the community

on strategic projects.



vi

6.20 The Committee recommends that the Chief Minister’s 2007–10 Annual

Report Directions, under section B.1, be amended to require the Strategic Project

Facilitation Group (or its successor) to report on the number and nature of formal

community engagement strategies prepared and submitted in response to

sensitive or complex strategic proposals.


6.22 The Committee recommends that the Government report to the Assembly

on the last sitting day in March 2011 on the effectiveness of the revised

Community Engagement Manual and the new criteria and process for

consultation.

R E C O M M E N D A T I O N 1 0

6.32 The Committee recommends that the status of ACT Government

documents should be more clearly defined to ensure a consistent approach to the

release of documents. Agencies should provide adequate protection to

information, including major consultancy work, held by government agencies, by:

clearly identifying whether consultancy reports can be released or should be

kept secure,

if it is releasable, the report or advice on how to inspect it should be published

on the agency’s website, to allow equitable access,

if it is not releasable, the title of the report and a statement of reasons for non-

release should be published on the agency’s website, and

if it is to be secure, the agency should take measures to prevent that report

from being disclosed outside of Government.


6.59 The Committee recommends that the Chief Minister’s Department

Community Engagement Unit evaluate the adequacy of community consultation

requirements for development applications, in particular for larger scale projects.

This would include the role of both Government and proponents in the consultation

process. The community’s understanding of opportunities to provide comment on

these processes and the level of information available to the public should also be

considered.


7.14 The Committee recommends that should a proposal requiring the direct

sale of land change significantly then the Government should formally reconsider

the application.



vii

7.43 The Committee recommends that the Government clarifies which agency

chairs the Direct Sales Eligibility Assessment Panel.


7.45 The Committee recommends that, in the case of strategic projects, a

complete cost benefit analysis of the potential land uses for the site (against triple

bottom line considerations) be prepared to ensure the most appropriate use and

the best return for the people of the ACT.


7.58 The Committee recommends that the Government create an ACT Planning

Strategy as required by the Planning and Development Act 2007. The Strategy

should be prepared by the Chief Minister’s Department and should integrate

infrastructure, transport, energy, land use, economic, population, environmental,

and social issues. There should be significant community involvement in the

strategy.


7.59 The Committee recommends that, as part of the establishment of the

Department of Land and Property Services and the creation of an ACT Planning

Strategy, the Government critically examine the current roles played by agencies

in strategic planning in the ACT with a view to establishing a sustainable strategic

planning framework.


8.17 The Committee recommends that the ACT Commissioner for Public

Administration develop good practice guidelines for whole of government working

in the ACT Public Service (ACTPS). The Guidelines should encompass the key

principles of whole of government working and provide clear direction on the roles

and responsibilities of ACTPS employees when working collaboratively on whole

of government projects, programs or service delivery. This would include

information management, external communications, budget and performance

management issues.


8.23 The Committee recommends that the Government consider making

changes to the budget and accountability frameworks to support cross-agency

initiatives. In particular, where possible, agency performance measures should be

amended to facilitate whole of government working. This should be done without

undermining appropriate accountability and reporting measures for each agency.

R E V I E W O F A U D I T O R - G E N E R A L ’ S R E P O R T N O . 7 O F 2 0 0 8 : P R O P O S A L F O R A G A S - F I R E D P O W E R S T A T I O N

A N D D A T A C E N T R E — S I T E S E L E C T I O N P R O C E S S

1

1 INTRODUCTION AND CONDUCT OF THE

INQUIRY

1.1 Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site selection process (the Audit report) was presented to the Legislative Assembly for the ACT on 10 December 2008.

1.2 In accordance with the Standing Committee on Public Accounts Committee’s (the Committee) resolution of appointment the Audit report was referred to the Committee for examination.

1.3 The Committee resolved on 22 April 2009 to inquire further into the Audit report.2

1.4 The Audit report summarises the results of a performance audit that reviewed the ACT Government’s decision-making process relating to the selection and offer of a site for the proposed gas-fired power station and data centre.3

Terms of reference

1.5 The Committee’s terms of reference were to examine the Audit report and report to the Legislative Assembly. Whilst the Committee’s terms of reference were the information contained within the Audit report, the Committee specifically focused on:

…the administrative processes used for the consideration and facilitation of strategic projects in the Australian Capital Territory (ACT).4

Conduct of inquiry

1.6 The Committee received a Government submission in relation to the findings and recommendations of the Audit report.5 The Committee also received a

2 Legislative Assembly for the ACT, Hansard, 5 May 2009, p. 1862. 3 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process, p. 3; Legislative Assembly for the ACT, Hansard, 5 May 2009, p. 1862. 4 Inquiry Terms of Reference, 30 April 2009. 5 Dated 29 April 2009.


2

briefing from the ACT Auditor-General on the Audit report.6

Advertisement

1.7 The Committee invited submissions by way of public advertisements appearing in the Canberra Times and Chronicle on Saturday 9 May 2009 and Tuesday 12 May 2009 respectively.

Submissions

1.8 The Committee received five submissions and three supplementary submissions. The individuals and organisations that lodged submissions are listed at Appendix A.

Public hearings

1.9 The Committee held public hearings on: 4, 5, 12 and 13 August; 30 September; 7 and 28 October; and 27 November 2009. Witnesses who attended public hearings are listed at Appendix B.

1.10 The Committee met on 27 November, 1, 2, and 4 December 2009, and 1 and 2 February 2010 to discuss the Chair’s draft report, which was adopted on 2 February 2010.

Structure of the report

1.11 The Committee considered and assessed the matters of significance raised by the Audit report in the context of its terms of reference. Its report focuses on a selection of the significant issues raised and also provides a summary of the Government’s response in relation to these.

1.12 The Committee’s report is divided into two parts and covers the following main topics:

Part 1—Background to inquiry

Chapter 1—Introduction and conduct of the inquiry

6 19 March 2009.



3

Chapter 2—Audit background and findings

Part 2—Inquiry

Chapter 3—Administration of strategic projects in the ACT: the need for supportive structures and processes

Chapter 4—New Department of Land and Property Services

Chapter 5 —Government interaction with territory owned businesses and their commercial partners

Chapter 6—Community consultation

Chapter 7—Land use planning

Chapter 8—Whole of government working

Chapter 9—Conclusion

Acknowledgements

1.13 The Committee thanks all those who contributed to its inquiry by making submissions, providing additional information or appearing before it to give evidence.


4



5

2 AUDIT BACKGROUND AND FINDINGS

2.1 This chapter presents an overview of the Audit background and key findings including audit objectives, scope and audit opinion.

Audit background

2.2 After enormous community angst the Committee wrote to the Auditor-General on 24 July 2008 to request that an audit be conducted into the process used to select a site for the proposed gas-fired power station and data centre. After considering the issues raised by the Committee, the Auditor-General decided to conduct an audit with the following objective:

To examine the government decision-making process relating to the site selection for the proposed gas-fired power station and data centre.7

2.3 A consortium known as the Canberra Technology City (CTC) consortium— consisting of ActewAGL and Technical Real Estate Pty Ltd—put forward to the ACT Government in May 2007, a proposal for the development of a gas-fired power station and data centre. The proposed project involved the construction of a gas-fired power station and its associated utility installations, a computer data centre, an overhead high voltage power line and a high pressure natural gas pipeline. The proposal also included a secondary site for a back-up data centre in Belconnen.8

2.4 The primary site selected for the CTC proposal was Block 1676 (formerly 1671), District of Tuggeranong.9

2.5 The audit took place in the lead up to the 2008 ACT Legislative Assembly election. The administrative decision making process for the proposal was intensely scrutinised during the campaign.

7 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process, p. 5. 8 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site


selection process, p. 6.


6

Audit objectives and scope

2.6 The Audit specifically focused on whether audited agencies had complied with relevant Government policies and better practices, including community engagement and other consultation requirements, and whether the decision-making processes had taken into account the economic, social and environmental impacts on the community.10

2.7 The Audit did not address the merit or suitability of the Canberra Technology City (CTC) proposal, nor current ACT Planning and Land Authority (ACTPLA) processes to assess development applications for the site. However, in the interest of completeness, the Audit did consider the early advice from ACTPLA on land use, and discussed the completed parts of the consultation process for the development assessment (DA).11

2.8 At the time of the Audit, the DA from the CTC consortium to build the data centre and power station on Block 1671 Tuggeranong was under assessment by the ACTPLA. As a consequence, a number of issues put forward in submissions to the Audit, including those from the interest group, Canberrans for Power Station Relocation Incorporated (CPR Inc.) and Members of the Assembly, were assessed as part of the statutory DA process, and were outside the scope of the Audit and its subsequent report.12

Audit opinions and key findings

2.9 The Audit report contained the following audit opinions13 drawn against the audit objectives:

Government agencies complied with existing Government processes, leading to the agreement on a site (Block 1671, District of Tuggeranong) for








7

the CTC proposal. These processes, however, were not sufficiently robust to give confidence that the public interest was fully taken into account.

The Government did not have sufficient information on the CTC proposal prior to lending strong support to it and committing to an Option for a direct land sale. The Government, however, reduced the risks to the Territory by requiring the consortium to meet a number of conditions, including obtaining an approved DA and providing key information about the project, such as a business case, prior to a direct land transfer.

There is significant scope for improvement in the administrative processes used for consideration and facilitation of strategic projects. 14

2.10 The Audit made key findings in the following areas:

project initiation and facilitation planning and zoning communication and consultation site selection and approval, and the land transfer process.15

Audit recommendations

2.11 The Audit report made five recommendations16 to address the audit findings, summarised as follows:

Audit area

No. of recommendations

Project initiation & facilitation—conclusion 1

Site selection & transfer—planning and zoning 1

Site selection & transfer—conclusion 1

Communication and consultation—communication with the private sector

2



selection process, pp. 6–9. 16 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process, pp. 10–12.


8

2.12 In its submission, the Government agreed with four of the recommendations and agreed-in-principle with one recommendation.17

2.13 A summary of the Auditor-General’s recommendations and the Government’s response are at Appendix C.

2.14 In evidence, the Auditor-General stated:

I think that the government’s response in terms of our recommendations has been generally very positive. We are actually very encouraged that some of our findings regarding the administrative process to facilitate projects in the project facilitation unit have been modified and implemented. Other recommendations are also agreed to by the government. So we are generally happy about the government’s response to the report.18

17 ACT Government submission, 29 April 2009. 18 Mrs Tu Pham, Transcript of evidence, 13 August 2009, p. 57.



9

3 ADMINISTRATION OF STRATEGIC

PROJECTS IN THE ACT: THE NEED FOR

SUPPORTIVE STRUCTURES AND

PROCESSES

3.1 Strategic projects or multi-agency initiatives require government agencies to work across boundaries towards a shared goal and an integrated government response to a particular issue. A range of structures and processes are required to support such work. It is these structures and processes that can critically influence the success of strategic projects or multi-agency initiatives. This was the case for the process used to select a site for proposed the data centre. At least five government agencies – the Chief Minister’s Department, Department of Treasury, Land Development Agency, ACT Planning and Land Authority and ACT Health – were significantly involved in the process. Several other government agencies also played a role.

3.2 At the time decisions were being made in relation to the site for the proposed data centre the Chief Minister’s Department (CMD) was responsible for the coordination and facilitation of major projects for community and business development in the ACT. However, the Audit found no formal policies or procedures for dealing with strategic projects existed within the CMD. In particular, CMD’s policy division, the precursor to the Strategic Projects Facilitation group, was found to have:

no formal policies or procedures for dealing with strategic projects that would enable it to better target its limited resources

no clear definition of what constituted a strategic project, and no checklists or guidelines to assist officers in dealing with proponents

of strategic projects or to ensure that each project was considered from a whole of government viewpoint against consistent criteria.19




1 0

3.3 The Audit report noted that the absence of a defined and sound process to facilitate strategic projects ‘can raise risks such as perceptions of lack of fairness and accountability’. 20 Further, where such formal frameworks are limited, this can lead to a project or issue being progressed without due consideration to the interests of all stakeholders.

3.4 In evidence, the Auditor-General stated:

…there was the lack of a formal process for the facilitation unit to proceed with that project, and they react to the time line, and they would react on a more ad hoc basis rather than having a more consistent and robust process. It may be the first major project that that particular unit had to facilitate, and they wanted to do it as quickly as they could, and that is where the mistake was made or shortcomings can be found.21

3.5 The Auditor-General recommended that to enhance accountability and to provide clarity to the community and private sector about the requirements associated with a request for strategic project facilitation status, that the ACT Government, in consultation with relevant agencies, should develop and adopt criteria to define a strategic project and the strategic project facilitation process. The criteria should identify when, how and what is required of proponents in relation to issues such as: a business case; financial analysis; a statement of financial and other risks, with appropriate risk allocation and mitigation measures; environmental and health impacts; planning approvals; a plan for appropriate consultation with the general community; and identifiable stakeholders; and coordination arrangements.22

3.6 Almost all of these requirements were missing from the proposal that was submitted to the Government and which it strongly supported. The Committee is concerned that senior officials behaved in such a manner without having the factual basis to back up the claims. It is extremely poor process for the Government to support a project where no business case was received, the analysis provided was not accepted by Treasury, there was no clarity concerning the makeup of the consortium and the scope of the project


selection process, p. 19. 21 Mrs Tu Pham, Transcript of evidence, 13 August 2009, pp. 67–68. 22 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site




1 1

continually changed.


3.7 The Committee recommends that, in the case of strategic projects, a complete business case be prepared before the project is formally submitted to the ACT Government.

3.8 In evidence, the Chief Minister told the Committee:

…the point that the Auditor-General made in relation to the definition of strategic projects was well made and the government accepts it. We were in the process at the time of developing or giving consideration to this issue, but I believe it has now been finalised and is formal policy.23

3.9 Criteria defining a strategic project or program have been developed and the strategic facilitation process has been detailed. The criteria and facilitation process have subsequently been adopted by the ACT Government.24

3.10 The process used to develop and finalise the criteria involved seeking advice on approaches employed elsewhere, reviewing the approaches used in other Australian jurisdictions including the Commonwealth. This information assisted with facilitating internal discussion within the Strategic Project Facilitation group (the SPFG) which extended to informal liaison with other ACT Government agencies including ACTPLA. External stakeholders were not consulted because the Government considered it was solely its responsibility to determine the nature of the strategic facilitation process and the criteria used to define a strategic project or program. Both processes involved detailed consideration of the Audit report and culminated in the preparation of a draft cabinet submission circulated to agencies for comment, prior to presentation to cabinet, and subsequent cabinet agreement to the criteria and facilitation process.25

3.11 The Committee was interested to know if there were any plans to develop a communication strategy to promote the existence of the strategic criteria and facilitation process more widely. The Committee was advised:

23 Mr Jon Stanhope MLA, Transcript of evidence, 4 August 2009, p. 8. 24 Submission No. 1, 29 April 2009; Transcript of evidence, 4 August 2009, pp. 8–10. 25 Mr Jon Stanhope MLA, Response to Supplementary Questions, 4 September 2009.


1 2

There are no plans at present to develop a communications strategy to promote the existence of the criteria. However, this matter is kept under review and if it appears that such a strategy would be useful, it will be developed and circulated to external stakeholders.26

3.12 Since the adoption of the strategic criteria and facilitation process in April 2009, the SPFG has assessed five proposals under the criteria. All five projects are currently subject to the project facilitation process. One of the projects managed by the SPFG is consultation on the possibility of relocating the Islamic School of Canberra to the former Canberra Institute of Technology (CIT) site in Weston.27

3.13 The Committee believes that the Government should have consulted on the development of the strategic criteria and facilitation process. Not to consult with the community and industry on the new criteria before they are used may well lead to the very problems that occurred with this proposal. The Committee is concerned that the Government hasn’t learnt its lesson on the value of consultation. The Committee also questions the need for determination of the criteria and the facilitation process to remain secret.


3.14 The Committee recommends that the Government release the strategic criteria and facilitation process policy for public consultation, and that it modify the policy if necessary.

3.15 The Committee was interested in the views of various witnesses that appeared before it as to the importance of developing a culture that supports working at a service wide level and its contribution to the success of strategic projects or multi-agency initiatives.28

3.16 The Chief Minister commented:

I consider that employee identification as a member of the wider public sector certainly contributes to the success of cross-agency or service-wide work. Successive ACT Governments have maintained policies aimed at encouraging a

26 Mr Jon Stanhope MLA, Response to Supplementary Questions, 4 September 2009. 27 Mr Jon Stanhope MLA, Response to Supplementary Questions, 4 September 2009. 28 Commonwealth Management Advisory Committee (MAC), Connecting Government—Whole of

Government responses to Australia’s priority Challenges, 2004.



1 3

whole-of-government perspective. …knowledge of the wider public sector facilitates an understanding of the roles of individual agencies, including knowing when those agencies simply must be allowed to get on with their task. In this regard, I note the emphasis placed by the Minister for Health, when appearing before the Committee, on the importance of an agency like ACT Health remaining very focused on health matters alone – this reflects its central role in securing the health of the ACT community. I also note the emphasis by the Chief Planning Executive, when appearing before the Committee, on the need for his organisation, when assessing a specific project, to ‘revert to thinking that we are the statutory planning authority and we have to be at arm’s length from this because we are going to have to assess this thing’. Of course, it is very important that all Government employees identify closely with the Canberra community and with the key policies and objectives of the Government they serve, whilst retaining due regard for the specific role and responsibility of the agency that employs them.29

3.17 The Chief Planning Executive told the Committee:

It would depend on the project. If it is a strategic project, then we will take a broader, whole-of-government view because we believe we play a role as the strategic planner for Canberra. On a particular or specific project like this, depending on when we are engaged in that process, increasingly, we will revert to thinking that we are the statutory planning authority and we have got to be kept at arm’s length from this because we are going to have to assess this thing. With respect to the size of the ACT government, and where agencies have multiple roles, you cannot effect that. As I said, we were involved in identifying potential sites. We were involved in the process of moving this thing up into the potential for a direct grant. But throughout all of that process, we were cautioning other agencies that they needed to respect our role, ultimately, as a statutory agency in assessing the development application. So we are fairly clear and discrete with respect to how we exercise that role. But as I say, a project like this may have come in in the form of the government looking at providing alternative energy supplies for the ACT, one of which is a potential gas facility. ACTPLA, as a strategic planner, might be asked: “Where would you be looking at this?” Then we would take on a broader strategic planning role. That is not how this came to us.30

3.18 The Minister for Health told the Committee: 29 Mr Jon Stanhope MLA, Response to Supplementary Questions, 4 September 2009. 30 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 56.


1 4

I think on this issue I know that ACT Health enjoys close relationships with the planning authority and, indeed, with a lot of private industry in the ACT. I encourage this and they have to do this through the work they do through Health Protection. I think it is very important that ACT Health remain very focused on health matters alone. So in a way Health needs to stand slightly outside because its aims and objectives are not necessarily the same as the rest of the ACT government and particularly through the role that the Chief Health Officer plays. Again, we are reflecting on a particular proposal here but as I am appearing as the Minister for Health, I think the relationships between the ACT government in terms of communications around major proposals are pretty good. I think obviously there is always room for improvement but from my point of view, for ACT Health, they work quite well. But ACT Health has a very specific job to do and it needs to remain focused on that and not necessarily become part of putting the views of ACT government ahead of ACT Health or the health of the ACT community if those two are in conflict. I do not think they necessarily were, but it is important that they remain focused on the job that they have to do. 31

3.19 The Government expressed a view that it is essential that CMD, when dealing with sensitive or complex development proposals, respects the role of specific government agencies like ACT Health and the ACTPLA, so as not to interfere in their statutory assessment processes.32 However, as noted above, it is also the responsibility of CMD to ensure that there is an effective cross-agency approach to the administration of strategic projects in the ACT.

3.20 A number of audit findings confirm that more work is needed to develop capability to support cross-agency work. A culture and capability that supports cross-agency work requires an understanding of the different views and expertise participating agencies bring to the project, program or service delivery. The Audit found that in the decision making process, some good advice was provided by government agencies that was often ignored.33 The Auditor-General commented that:

CMD did not always adequately address valid issues raised by agencies during

31 Ms Katy Gallagher MLA, Transcript of evidence, 5 August 2009, pp. 31–32. 32 Mr Jon Stanhope MLA, Response to Supplementary Questions, 4 September 2009. 33 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process, p. 36, pp. 17–19.



1 5

the coordination process.34

3.21 In commenting on the effectiveness of cross-agency work with regard to the site selection process, the Auditor-General stated:

The project was coordinated by CMD; so CMD, particularly the project facilitation unit, led the project and was very much in consultation with agencies to provide advice to the government about the site option decision. At the early stages of the project, the consultation was directly with LDA quite a bit to identify possible sites. After the LDA consultation, most of the work was done through CMD. I think the consultation process was good in terms of having everyone involved. There were some shortcomings in the process. One time they overlooked the Department of Disability, Housing and Community Services and did not even know that the department had a lease on that site. They forgot about that department in the first round of consultation and came back later and said: “We overlooked you. Can you give us some comment now?” At that time the department said, “We do not have sufficient information to be able to provide comment. Maybe we have to consider the removal of the health facility there.” In the process, we believed that some good advice was given by Treasury and LDA but the advice was not always taken on board.35

3.22 The Committee notes that a failure to adequately address valid issues raised by agencies during the coordination process may be indicative of a common feature of whole of government working, in that tension between the centre of government and departments and agencies needs to be managed.36 With a greater capacity for planning and establishing cross-government initiatives, the centre can become more powerful in whole of government approaches. At the same time, departments and staff need the authority and autonomy to make decisions, particularly for initiatives targeting local communities.37

3.23 In adopting whole of government approaches it is important to recognise the 34 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process, p. 19. 35 Mrs Tu Pham, Transcript of evidence, 13 August 2009, p. 66. 36 Mulgan, G. (2005) Joined up government: Past, present and future in V. Bogdanor (ed.), Joined up

Government, OUP/British Academy; Christensen, T. & Lægried, P. (2006b). The whole-of-government approach - regulation, performance, and public sector reform. A performing public sector: the second transatlantic dialogue. Leuven, Belgium.

37 VSSA. (2007) Joined up government—A review of national and international experiences, Working paper no. 1, Victorian State Services Authority (VSSA), p. 7; Smith, M.J. (2005). Policy making and joined-up government. Lyons Inquiry Devolution Seminar, 22 June; Parker, S. & O'Leary, D. (2006). Re-imagining government: Putting people at the heart of New Zealand's public sector.


1 6

different perspectives and resources central and line agencies will bring to cross agency work. The former Australian Public Service Commissioner has stated:

…line agencies are often the custodians of the evidence that should support policy for example, while central agencies may well have a better handle on what the government is looking to achieve from a policy development exercise. We should be looking for synergies here, rather than, as is sometimes the case, engaging in a contest to determine which source of advice will prevail. Line agencies are the custodians of the data, the day to day regulators, the people who know what will happen when very complex and sensitive systems are adjusted at critical points. Central agencies are information rich in a context sense: they know what the government wants at a strategic level across a range of portfolios and they have access to ministers and through ministers to money.38

3.24 A submission to the Committee also noted that a consistent theme with regard to the Audit report findings was:

…the cross-jurisdictional interest of various government departments and their involvement, and potential to confuse policy positions that relate to a single strategic project.39

3.25 The Committee notes that there are ongoing issues with large infrastructure projects in the ACT that require whole of government coordination. For example, the Standing Committee on Justice and Community Safety has recently completed an inquiry into the delay in the commencement of operations at the Alexander Maconochie Centre. 40 In addition, the Independent Competition and Regulatory Commission is currently undertaking an investigation relating to the enlarged Cotter Dam project.41 The Gungahlin Drive Extension project is a further example of a large infrastructure project that was not effectively coordinated.

3.26 The issues raised in this chapter highlight the need for more supportive structures and processes if there is to be efficient and effective administration

38 Briggs, L. (2005) A Passion for Policy—Policy and whole of government working in J.Wanna (ed.)

A passion for policy—Essays in Public Sector Reform, ANU E-Press. 39 Submission No. 4, 31 July 2009, p. 3. 40 Standing Committee on Justice and Community Safety, Inquiry into the delay in the commencement of

operations at the Alexander Maconochie Centre, Report 3, November 2009. 41Disallowable instrument DI2009– 227, Independent Competition and Regulatory Commission

(Investigation into Projected Costs of the enlarged Cotter Dam water security project) Terms of Reference Determination 2009.



1 7

of strategic projects in the ACT. These issues are discussed in further detail in the remainder of the report.


1 8



1 9

4 NEW DEPARTMENT OF LAND AND

PROPERTY SERVICES

4.1 On 1 December 2009 a new department, called the Department of Land and Property Services, began operations. According to the Chief Minister, the new department is intended to facilitate closer integration of the land supply, property management and development roles and responsibilities currently found in the Chief Minister’s Department, the Department of Territory and Municipal Services and the Land Development Agency.42 This will clearly impact on strategic planning in the ACT but there has been little public information about the new department.

4.2 The effectiveness of any department, guideline or policy is reliant, in a large part, on all relevant stakeholders being informed of its existence along with an awareness of their respective roles and obligations in accordance with the policy or guideline.


4.3 The Committee recommends that the Department of Land and Property Services develop a comprehensive communication plan as a way of informing all stakeholders—internal and external—about its role.


4.4 The Committee recommends that Government clearly defines the respective responsibilities of the Department of Land and Property Services, the Land Development Agency and the ACT Planning and Land Authority in regard to project facilitation to avoid confusing overlap. The Government should also clearly outline how these agencies will interact with each other.

42 Mr Jon Stanhope MLA, Media Release, New department to drive greater government efficiencies,

2 December 2009.


2 0



2 1

5 GOVERNMENT INTERACTION WITH

TERRITORY OWNED BUSINESSES AND

THEIR COMMERCIAL PARTNERS

5.1 The genesis of this project was the desire of ActewAGL to build a gas fired power station in the ACT. This was one of the original intentions behind the formation of ActewAGL (a commercial company 50% owned by ACTEW – a territory owned corporation). ActewAGL considered a number of options but did not proceed with any as they were not thought to make economic sense. The Chief Executive Officer of ActewAGL informed the Committee that:

Thought was then given to how we could do it in conjunction with some other project. The idea of a data centre with a dedicated gas generator was developed within ActewAGL as an idea.43

5.2 ActewAGL then described why they supported the project:

…it would be a tremendous thing for the city and the ACT—a great economic project, significant benefits, exactly the sort of industry you would have wanted. The gas-fired power station that would be powering the power station, because of its model, would be significantly less in greenhouse emissions than if it was fired from the grid from a coal-fired power station. So we thought this was a very good project and we proceeded with it. That was our motivation. For ActewAGL, of course, a significant motivation was that we would be able to sell the gas, which was a good commercial motivation. Also, as they built each bank of computers, they would pay us a success fee.44

5.3 The Chairman of ActewAGL also said at the hearing that even when the project was scaled back considerably:

…we also still believed that this was a fantastic thing for Canberra, even if we were not going to make the kind of commercial killing that we thought we were going to make earlier in the piece.45

43 Mr Michael Costello, Proof transcript of evidence, 27 November 2009, p. 105. 44 Mr Michael Costello, Proof transcript of evidence, 27 November 2009, p. 106. 45 Mr John Mackay, Proof transcript of evidence, 27 November 2009, p. 118.


2 2

5.4 The strong involvement of ActewAGL seemed to have been confused by some in the public and government as involvement by ACTEW or a government agency.

5.5 The Audit noted from a number of email and other communications that some government agencies appeared to assume a relationship with ActewAGL similar to that of a government agency. On occasion government agencies involved ActewAGL as one of the government agencies in coordinating comments and inputs into government submissions.46 The Auditor-General stated:

This approach was not appropriate for government dealings at arm’s length with ActewAGL as part of the private sector consortium, and could expose the agencies to the risk of inadvertently disseminating relevant information that is not normally available to non-government entities.47

5.6 In response, the Government commented:

It remains the agencies’ view that a high degree of probity is exercised in dealing with the Territory owned businesses and their commercial partners. Agencies are generally aware of the status of commercial (as opposed to government entities), and adopt a professional arms-length approach in their business dealings with such organisations.48

5.7 When asked to comment on the Government’s response, the Auditor-General told the Committee:

We are aware of the government’s response but we have not followed up to see whether there is any change in the way the information is communicated to agencies regarding the protocol in dealing with private companies. I think that all agencies seem to act in good faith, and there is no misconduct at all. I just want to make that clear. On the other hand, because ActewAGL is familiar with government agencies, hence there are occasions when I think agencies are not as cautious as they would be with another private company. Information somehow got to the consortium that should not be available to the consortium…In the end, it is very much up to the individual senior officers in the department to take good care of communicating the information to other departments and to outside companies. Often, some of the emails would be cc’ed to ActewAGL, which



selection process, p. 46. 48 Submission No. 1, 29 April 2009.



2 3

would not normally be the case. I think extra work may be needed to remind individual officers that communication between agencies should not be cc’ed to

other—49

5.8 In line with the Auditor-General’s comment and her fifth recommendation in the report, the Committee believes that there is a need for the Government to develop specific guidelines to address how Government agencies should interact with territory owned businesses and their commercial partners, such as ActewAGL.


5.9 The Committee recommends that the Government develop guidelines outlining clear processes for all dealings and communications with territory owned businesses and their commercial partners, such as ActewAGL. The issue of who it is appropriate to copy into emails should be addressed in the guidelines.

49 Mrs Tu Pham, Transcript of evidence, 13 August


2 4



2 5

6 COMMUNITY CONSULTATION

6.1 The Committee acknowledges that there was widespread community opposition to the proposed site for the gas-fired power station and data centre. The administrative decision making process for the proposal was intensely scrutinised in the lead up to the 2008 ACT Assembly Election.

6.2 The Committee acknowledges that the independent findings of the Auditor-General regarding the site selection decision-making process helped inform public debate on the issue. The findings have also been responsible for a number of transparency, governance and community consultation improvements to the administrative process for the consideration and facilitation of strategic projects in the ACT.

6.3 The Audit found that agencies and proponents were compliant with consultation under the planning legislation.50 The widespread community concern clearly indicates there was scope for improvement in the overall community consultation process, in particular for significant projects.

6.4 There is wide agreement in Australia, and throughout OECD countries, that citizens’ expectations of their governments to engage them openly in public policy processes are appropriate and legitimate.

6.5 Further, the literature emphasises that for complex problems or issues, citizen engagement can be a critical component of managing the issue.51 This needs to be done well or it risks community frustration, disengagement and disempowerment.52 Consultations need to be representative of the community or target group, and this can be difficult for poor or marginalised


selection process, p. 48. 51 Curtain, R. (2006). Citizens can solve wicked problems. New Matilda: new.matilda.com 52 Lasater, Z. (2006). Addressing the 'wicked' problems beyond the silos: Joined up government within

the context of place-based approaches. Governments and communities in partnership conference, Melbourne; Maguire, K. & Truscott, F. (2006) Active governance: The value added by community involvement in governance through local strategic partnerships. York Publishing Services: York.


2 6

groups who do not have an organised voice or the capacity to contribute.53

6.6 The Committee acknowledges that whilst citizens engage the government and exercise their right to seek to influence public policy decisions, at the same time, they tacitly acknowledge the equal rights of other citizens to also do the same according to their preferences or views. On this basis, as external stakeholders often seek incompatible public policy outcomes, governments are routinely required to decide between competing demands.54

6.7 The importance of the Auditor-General’s contribution to an efficient, effective and ethical public sector was emphasised in a submission to the Committee’s inquiry. The submission recommended that the Auditor-General be given greater funding and greater authority to audit, inspect and implement recommendations.55 In evidence, a witness expanded on the importance of the Auditor-General being adequately funded and resourced, stating:

Because it is a flat level of government. We have noticed throughout this process that when you have one party in the ACT that has power in the Legislative Assembly, there is very little anybody can do to stop it doing what it wants. There are several ways. If the community councils were stronger and had a voice and through the Auditor-General… …If you are going to disallow, if you are going to reduce the cost of the Auditor-General, which is one of the primary independent, accountable figures in the ACT government, you are left with nothing. You are left with a dictatorship. You are left with a voiceless community. It is not right.56

6.8 In evidence, the Committee was told by a representative for the community group, Canberrans for Power Station Relocation Incorporated (CPR Inc.):

The primary statement that we would like to make is to give this committee an idea of the effects of this process on the community. We feel this has not really been addressed. You have had various speakers—Mr Stanhope, Mr Barr and Ms

53 Maguire, K. & Truscott, F. (2006) Active governance: The value added by community involvement in

governance through local strategic partnerships. York Publishing Services: York. 54 MAC. (2004) Connecting Government—Whole of Government Responses to Australia’s Priority Challenges,

p. 95. 55 Submission No. 5, 31 July 2009. 56 Mrs Susan Penn-Turrall, Proof Transcript of evidence, 30 September 2009, pp. 78–79.



2 7

Gallagher—in here talking about how they have seen the process go and what lessons they feel they have learnt from this. Throughout the entire process we feel as a community that we have been very badly done by, which brings us to the point that I think you made, Ms Le Couteur, about the consultation process within development. The consultation process, we believe, does not exist. The way this proposal has been dealt with has been pretty much our being told what is going to happen to us.57

6.9 The Audit found that CMD did not engage with the community at an early stage, and did not follow the better practices as detailed in the ACT Government Community Engagement Service Charter and Community Engagement Manual.58

6.10 In its submission, the Government advised that it has committed to reviewing the ACTPS community engagement framework. The Government has agreed to:

refresh the community engagement frameworks on current best practice, and

is reviewing and updating the ACT Guide to Engaging with the Community.59

6.11 The Chief Minister commented:

We have sought to respond as a government over this last year in relation to community concerns about consultation. We have done that, I think, quite significantly. I think everybody would acknowledge that.

We have changed our level of engagement. We advertise, for instance, every week in the Canberra Times. Significantly, we advertise and are consulting far more rigorously and significantly than we perhaps have in the past. I think that has produced some very positive outcomes. I have to say it is probably a very positive result of the Auditor-General’s report and of the community debate and interest in this particular issue that the government has changed its consultation methodology.60

6.12 A representative from CPR Inc. commented:

57 Mrs Penn-Turrall, Proof Transcript of evidence, 30 September 2009, p. 70. 58 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process, p. 48. 59 Submission No. 1, 29 April 2009. 60 Mr Jon Stanhope MLA, Transcript of evidence, 4 August 2009, p. 3.


2 8

What I think is happening now—with respect to the government’s very great pride in the way they are consulting—is carpet bombing consulting. You can completely swamp people with so much consultation.61

6.13 When asked how do you make it better, a representative from CPR Inc. told the Committee:

I totally get what the Planning Institute of Australia is saying when they say, “It has got to be allowable for a state significant development.” But if you have it as an ability of the government—and a flat level government the way we have in the ACT–to literally legislate through whatever issues or blocks it comes across then consultation will remain meaningless. You cannot offer the community a voice and then say, “We don’t like what we’re hearing, so we’re taking that away. We don’t like the issues you’re putting. We’re not going to address those issues. What we’re going to do is legislate through them.” That is where you have to make it matter; otherwise why would we bother doing this again?62

6.14 The appropriate level of consultation is a continuing debate in the ACT and other jurisdictions. It is clear from community comments that they do not want to be consulted if they feel that their input will not affect the final result.

6.15 Although the Government claims to have responded quite significantly to issues relating to consultation, the Committee notes concerns about the recent consultation concerning the purchase of Calvary Hospital and the sale of Clare Holland House. The Committee believes that the Government breached their own community engagement guidelines which state that major policy initiatives should be consulted over a twelve week period. However, the Government only consulted over six weeks and a day. The policy also states that consultation should avoid school holidays yet the October school holidays fell within the consultation period.63

6.16 The Committee emphasises that a unique feature of ACT Government administration, in that it is charged with the management of state/territory responsibilities, as well as local government responsibilities, can provide

61 Mrs Penn-Turrall, Proof Transcript of evidence, 30 September 2009, p. 74. 62 Mrs Penn-Turrall, Proof Transcript of evidence, 30 September 2009, p. 74–75. 63 Your Guide to Engaging with the Community: ACT Government Community Engagement Manual,

Community Engagement Unit, Department of Disability, Housing, and Community Services, 2005, p. 6.



2 9

greater potential to engage more effectively with citizens when compared with other public sector jurisdictions.

6.17 With regard to this feature, the Chief Minister has commented that:

This unique administrative structure gives the ACT the opportunity to create avenues for collaboration and participation that are not easily available to other jurisdictions. Here in the ACT the government that educates your child is the same as the government that empties your bins. It has seen you at your best and your worst, and has been seen by you in the same way. …I believe that the administrative structure of the ACT, combining municipal and state functions, lends itself in quite exciting ways to closer community collaboration and involvement, and not just within discreet portfolio areas. One of the ACT government’s ambitions has been to take a more holistic approach to government.64


6.18 The Committee recommends that the Government continue to refine community engagement guidelines and to consult the community about them.


6.19 The Committee recommends that, as a minimum, the Government adhere to current community engagement guidelines when consulting with the community on strategic projects.


6.20 The Committee recommends that the Chief Minister’s 2007–10 Annual Report Directions, under section B.1, be amended to require the Strategic Project Facilitation Group (or its successor) to report on the number and nature of formal community engagement strategies prepared and submitted in response to sensitive or complex strategic proposals.

6.21 The Government has advised the Committee that a ‘refreshed and

64 Stanhope, J. (2005) A Passion for Policy—Shaping opportunities, Creating Public Value:

Government Community Collaboration in the Australian Capital Territory in J. Wanna (ed.) A passion for policy—Essays in Public Sector Reform, ANU E-Press.


3 0

redesigned’ Community Engagement Manual is being developed. The Committee was advised that the revised manual ‘will provide practical guidance to all agencies on the most appropriate and effective means of engagement, and also provide the tools to assist with conducting successful engagements’. A draft of the new manual was anticipated at the end of September 200965, although as at early February 2010 the latest publicly-available version of the manual is dated 2005.


6.22 The Committee recommends that the Government report to the Assembly on the last sitting day in March 2011 on the effectiveness of the revised Community Engagement Manual and the new criteria and process for consultation.

Provision of information to the community

6.23 Evidence provided by CPR to the Committee suggests that in February 2008 the Government was informed that the consortium no longer wanted to proceed with plans to provide excess power over what was required to operate the data centre.66 Despite this, proponents continued to suggest that the development could lead to an emergency power source for Canberra around the time the original DA was released in April 2008.67

6.24 The Audit noted that a key document— the Hume Industrial Planning Study (the document) commissioned by ACTPLA—available to assist in the identification of potential sites for the proposal—was provided by the Land Development Agency (LDA) to a consultant of the consortium.68

6.25 ActewAGL denied ever receiving the Hume Industrial Planning Study, although they noted that a planner they employed had knowledge of the Study:

65 Mr Jon Stanhope MLA, Response to supplementary questions—Inquiry into Auditor-General’s

Report No 7 of 2008, 4 September 2009. 66 CPR, Supplementary Submission No. 5a, p. 1; and CPR, Supplementary Submission No. 5b, p. 28. 67 CPR, Supplementary Submission No. 5b, p. 34. 68 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site




3 1

The matters that the Auditor-General was referring to were things like the Hume industrial study. We made it quite clear throughout the consultations to that report that the proponents did not receive the Hume industrial study. We employed a planner. The planner certainly had knowledge of the Hume industrial study, and presumably that informed his judgements about the sites. 69

6.26 The Audit found that the status of the document was not clear, in that it was not considered a confidential document but was never formally released. Residents indicated that the document was not available to the community but accessed a copy through the Freedom of Information (FOI) process.70 The Audit report, further noted that ACTPLA had stated that whilst the document was never formally released, and as it was not considered confidential, it was available to those who requested it.71

6.27 The Committee sought clarification that ‘request’ on this occasion meant through the FOI process, to which the Chief Planning Executive stated:

…FOI, because at the time we anticipated that the document would be going to cabinet.

… We would typically not release a working document, and we would not release a document that, in our expectation, is going to go to cabinet.72

The Committee is concerned that the document was clearly not available to those who sought access to it.

6.28 In relation to whether the document would be publicly available, as opposed to through the FOI process, once it had been through cabinet, not through FOI, the Chief Planning Executive, further stated:

It depends on the nature of the document. If it was a study, if it had been to cabinet and unless cabinet had said, “We want this to remain a confidential document,” I doubt we would seek it to be required through FOI. But in other circumstances the document may be something more significant than a consultant study and which has political ramifications. We would be far more cautious in making that document publicly available.73

69 Mrs Dianne O'Hara, Proof transcript of evidence, 27 November 2009, p. 117. 70 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site


selection process, p. 46. 72 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 48. 73 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 48.


3 2

6.29 The Committee was interested to know whether a public register of all documents that ACTPLA retains was available publicly. An ACTPLA official told the Committee:

I think it would be fair to say that we have moved more and more to making these kinds of documents available on our website and they are indexed on the website. As an example, the EIS exemption on the Cotter went straight onto the website.74

6.30 Concerning the release of the Hume Industrial Study to the consortium, and not the community, the Committee enquired as to how this had occurred, seeking clarification as to whether the LDA were part of the consultation process for the study. The Chief Planning Executive responded:

LDA, Chief Minister’s Department and possibly TAMS are part of the groups that we consult with. I do not know that we necessarily had a formal steering committee, a government agencies steering committee, but we were engaging with all those agencies, so they were all involved in working with the consultants. Typically, as part of the process of advancing a project like that towards government, you send out draft copies of documents. This would have reached the stage of a draft working document.75

6.31 The Committee notes that the release of the Hume Industrial Study to a consultant of the consortium and only to the community via the FOI process appears to reflect an inconsistent approach to the release of documents by government agencies.


6.32 The Committee recommends that the status of ACT Government documents should be more clearly defined to ensure a consistent approach to the release of documents. Agencies should provide adequate protection to information, including major consultancy work, held by government agencies, by:

clearly identifying whether consultancy reports can be released or should be kept secure,

if it is releasable, the report or advice on how to inspect it should be published on the agency’s website, to allow equitable access,

74 Mr Vic Smorhun, Transcript of evidence, 12 August 2009, p. 49. 75 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 49.



3 3

if it is not releasable, the title of the report and a statement of reasons for non-release should be published on the agency’s website, and

if it is to be secure, the agency should take measures to prevent that report from being disclosed outside of Government.

Consultation in the planning process

6.33 The Audit raised the issue of the amount of consultation before DA, while the CPR and Planning Institute raised issues about the total amount of consultation.

6.34 The Auditor-General considered that the limited legal requirement for consultation prior to a DA was inadequate for significant projects such as the CTC proposal.76

6.35 Further, the Audit considered that it was not satisfactory for the Government to rely primarily on the proponent to conduct community consultation, if any, prior to the lodgement of a DA. The Auditor-General was of the view that this is particularly important in the case of a major project such as the proposal for the gas-fired power station and data centre with potentially significant impacts on the community and the environment. The Government therefore has a responsibility to ensure that complete and reliable information is provided at the right forums and is also accessible to people who may be affected by the proposal.77

6.36 The Chief Minister stated:

…some of the community discussion and concern around the process and the administrative processes relating to the proposed data centre was on this issue of pre-consultation.78

6.37 The Government indicated in its submission that ‘pre-DA consultation on a proponent-driven development proposal is not, nor should be, the



selection process, p. 48. 78 Mr Jon Stanhope MLA, Transcript of evidence, 4 August 2009, p.1.


3 4

responsibility of ACTPLA (as distinct to ACTPLA’s statutory requirement to notify and receive submissions on the DA once it is lodged). Were there to be a generalised requirement for community consultation to take place before a DA (or Environmental Impact Statement) was lodged’ a number of issues may arise.79

6.38 In evidence, a representative from the Chief Minister’s Department elaborated on these issues:

If we went out early and consulted on a project while it was in its development, there are two difficulties. One is that the government is sponsoring, other than in principle—which is probably appropriate—a project that may evolve into something that, when it gets to its fully fleshed out stage and is assessed, it may not agree with. That can lead to a number of problems: (a) confusion in the community and (b) the possibility of being sued by the proponent because we supported a project and then refused it. So there are those sorts of difficulties. The other issue is that it is appropriate to get a project fully developed before it is properly assessed. At the early stages that is the difficulty—if the government goes out and consults on X and the actual product turns out to be Y. What happens is that we generally ask the proponent to go out and answer all of the questions of the community, which may relate to planning issues and a whole host of issues that are outside the relevant planning. That is the other reason to separate the planning consultation from other consultation and why the government needs to facilitate but to keep, to some extent, at arm’s length from total support at an early stage.80

6.39 In relation to there being a need for proponents or government agencies to consult with the community prior to the submission of a DA, the Auditor-General commented:

I do not believe that the government fully appreciates what we recommended in that process. We never recommended that the government go out and act on behalf of the private sector, to give the impression to the community that the government actually acts on behalf of the proponent. We did not say that.

The statement that the risk to the government by making sure that the proponent engaged the community was somehow seen as interfering with the statutory process is not correct. I think that is a very weak argument on the part of the government. Firstly, the government had already indicated that it was a stakeholder in the process by its in-principle support of the project. The

79 Submission No. 1, 29 April 2009. 80 Mr George Tomlins, Transcript of evidence, 4 August 2009, p. 8.



3 5

government already had an interest to ensure that the project proceed as smoothly as it could. The government had an obligation to ensure that the proponent had a proper engagement policy to get the community aware of it.

The government can rely on the private company to do the consultation. If the government believed that it was not doing the right thing—I believe in this case the private consortium did not do the right thing—the government certainly had the obligation to do something about it.81

6.40 A representative of the Audit office further added:

…we have never said that the government should support or provide information on a private sector project. To the extent that they are a stakeholder and they have interests in that—they have said they have interests—then it makes sense to protect those interests by giving appropriate information.82

6.41 The Committee is aware that Government policy already encourages government agencies to consult prior to a DA when projects are sponsored by the government and have an impact on the community. Encouraging pre-DA consultation, whether from a proponent’s or the government’s point of view, makes good business sense, in that the community gets the right information which can limit the risk of any disputes and/or delay during the DA process. This form of consultation should not interfere with or duplicate any statutory planning process.83

6.42 In evidence to the Committee, the Minister for Planning, Chief Planning Executive and the Director of the Health Protection Service emphasised that they encourage proponents to engage with the community in advance of the statutory process.84

6.43 The Minister for Planning commented:

ACTPLA…can provide advice in pre-lodgement meetings and certainly can use the megaphone, whenever the media will report and whenever hearings like this occur, to send a very clear message to private sector components that it is worth their while to undertake significant consultation prior to lodging a development application.

81 Mrs Tu Pham, Transcript of evidence, 13 August 2009, pp. 60–61. 82 Mr Graham Smith, Transcript of evidence, 13 August 2009, p. 61. 83 Transcript of evidence, 13 August 2009, pp. 60–61. 84 Transcript of evidence, 12 August 2009, p. 52; Transcript of evidence, 5 August 2009, p. 35.


3 6

But there will always be some players in industry who dismiss that process. They then take their luck in the development application and potential appeals processes. The smart operators engage with the community in advance and tend not to have problems with their development applications.85

6.44 The Director of the Health Protection Service stated:

…proponents of major developments do often come to us prior to planning anyway because obviously from their point of view it is good to engage early to iron out any problems that we might envisage. From time to time we do get involved directly with proponents and work very closely with them to assist in getting a good outcome for the community.86

6.45 The Auditor-General also commented that where the Government is involved with a specific project it should clarify its role upfront so that the community is aware of the role government is playing. By establishing the role of government upfront it should not have any affect on the ACTPLA independent process.87

6.46 In the case of the proposal for the gas-fired power station and data centre, the Auditor-General stated:

If the government had been heavily involved in the project as a facilitator in terms of helping to identify the site, discussing impediments or coordinating other agencies, I cannot see that the government could not also facilitate the process of engaging the community with appropriate information. Remember that it is a really huge project involving a big power station in the middle of Tuggeranong.88

6.47 The Government has agreed in the light of experience gained from the site selection process for the data centre/gas-fired power station that, ‘any sensitive or complex strategic proposal will be required to submit a formal community engagement strategy to the Chief Minister’s Department’.89

6.48 A requirement under the community engagement strategy is to ‘identify possible issues and outline the proposed consultation process to take place

85 Mr Andrew Barr MLA, Transcript of evidence, 12 August 2009, p. 52. 86 Mr John Woollard, Transcript of evidence, 5 August 2009, p. 35. 87 Mrs Tu Pham, Transcript of evidence, 13 August 2009, p. 61. 88 Mrs Tu Pham, Transcript of evidence, 13 August 2009, p. 61. 89 Submission No. 1, 29 April 2009.



3 7

before the DA is submitted’.90

6.49 The Committee was interested to know which area in CMD would receive, consider and monitor these formal community engagement strategies. The Chief Minister told the Committee that:

CMD’s strategic project facilitation group will require the proponent of any sensitive or complex strategic proposal being considered by the group to prepare a formal community engagement strategy for consideration by the group. This strategy needs to satisfy the Government’s community engagement requirements. CMD’s Community Engagement Unit will assist by reviewing proposed community engagement strategies where the proposal is particularly sensitive or contentious.91

6.50 In practice, this requirement is intended to assist both the proponent and the community by alerting the latter to the proposal, even though it is in broad terms (without the detail associated with a formal development application). This gives the public an opportunity to consider the proposal and also serves to inform the proponent about the detailed issues that may need to be addressed in any subsequent development application.92

6.51 Since the requirement has been in place, the SPFG has considered the community engagement strategy associated with the possible relocation of the Islamic School of Canberra to the former CIT site in Weston.93 The Chief Minister stated:

Various possible sites were scoped before the former CIT site was identified as a possible new home for the School. Traffic and tree studies are currently being undertaken so that when the formal community consultation process starts in September, the community will have appropriate information about these aspects of the proposal. The Strategic Project Facilitation group will oversight the community engagement process, which will be conducted by an external consultant.94

90 Submission No. 1, 29 April 2009. 91 Mr Jon Stanhope MLA, Response to supplementary questions—Inquiry into Auditor-General’s

Report No 7 of 2008, 4 September 2009. 92 Mr Jon Stanhope MLA, Response to supplementary questions—Inquiry into Auditor-General’s



Report No 7 of 2008, 4 September 2009.


3 8

6.52 Both the Planning Institute and CPR raised the issue of the number of different places that the community is required to input into large scale projects.

6.53 The Committee was told by a representative of CPR that:

…if you are going to consult then the people you are consulting with have a voice. Again, I go back to our experience of what has happened. As to “meaningless” and “lip-service”, we responded to every single one of the government’s blocks they put before us. We responded to two DAs, we responded to HIA, an EIS, an Auditor-General’s report and this committee. Each one of those things that we raised—you have read them, Brendan—in consultation was valid and backed by expert advice. We did not make any of that stuff up. They remain an issue but none of them were addressed. What happened in the end, as the government did with the GDE, was that it came across a block to its desire and it basically legislated through it.

6.54 Representatives of the Planning Institute told the Committee that:

with the current process, where the EIS stands separate and alone and decisions on the environmental impacts are made in advance of the DA and then the DA is again consulted. Really, you get two bites of the cherry but only one decision, and that decision has already been made with regard to environmental impacts, so what are you actually achieving in consulting?95

You do not abandon the DA process and have an EIS only. If you are going to roll the two together then there has to be an EIS-DA process and all the rights of appeal and so forth have to be brought into that process. So you have the same thing. You are rolling the environmental process into the other. You retain all of those rights. There is no question of not having them.96

6.55 When the Committee asked ActewAGL about the consultation process, the ActewAGL Chairman told the Committee that:

We did not foresee the community storm. If we had foreseen the community storm, I guess we would have thought long and hard about how to handle that. I recall very well the day that we finally had access to this site. I was keen to announce it. In fact, I invited a journalist from the Canberra Times out to the site and got a picture of me standing on the site. I had the general manager with me. We were kind of almost high-fiving, saying: “What a terrific site this is. How clever we are.” As it turned out, the Canberra Times did not publish that picture.

95 Mr Hamish Sinclair, Transcript of evidence, 28 October 2009, p. 99. 96 Mr Tony Adams, Transcript of evidence, 28 October 2009, p. 101.



3 9

It published a great big diagram of the data centre and did not mention where it was. … We tried to do the right thing—we held lots and lots of meetings—but people were going ballistic about it, and in our own view we just did not kind of believe that their concerns were rationally based. I do not think we were helped by the paper, because it did beat up a lot of these things—about toxic fumes that were going to poison us all, the noise et cetera. It published some stuff that was outrageously scientifically wrong and 20 times worse than anything it was going to be. One of the maps the paper published on the front page had big red blotches all over Deakin. It was absolute scientific rubbish. 97

6.56 An important issue with consultation is what, if any, changes are made to a proposal as a result of the community views. The committee asked ActewAGL what the impact had been. Mr Costello, ActewAGL’s Chief Executive Officer, told the Committee that:

…in December the board said, “Let’s go ahead with this beyond the early consideration we’ve been giving, and let’s consider whether both projects make sense.” AGL finally came to the conclusion that in their view it did not. It was a bit disappointing to us, but that is where they ended up. They said, “We’ve looked at it again, and as far as we’re concerned it’s too small.”

THE CHAIR: So from your point of view the community’s views did not change the proposal?

Mr Costello: It had a very important impact. I guess in a way I was semi-relieved because it meant we did not have to argue about that. But the community’s view had a big impact on something else. We had originally planned over 100 megawatts on that site—110, I think, for the dedicated power plant for the data centre. We had asked for approval for that, even though we were only planning to build 28 megawatts to start with. We withdrew that and said we would only ever build 28 megawatts on that site. So that was listening to the community, yes.

98

6.57 However, Mr Costello also said that it would go ahead anyway:

If it got approval, of course. Sorry, would it not go ahead if it got approval, after following proper process? 99

6.58 As the Auditor-General said, the proponents followed the legal requirements for consultation, however they clearly were not sufficient to ensure all the

97 Mr John Mackay, Proof transcript of evidence, 27 November 2009, p. 113. 98 Mr Michael Costello, Proof transcript of evidence, 27 November 2009, p. 115. 99 Mr Michael Costello, Proof transcript of evidence, 27 November 2009, p. 114.


4 0

community felt that their views had been considered and appropriately acted on.


6.59 The Committee recommends that the Chief Minister’s Department Community Engagement Unit evaluate the adequacy of community consultation requirements for development applications, in particular for larger scale projects. This would include the role of both Government and proponents in the consultation process. The community’s understanding of opportunities to provide comment on these processes and the level of information available to the public should also be considered.



4 1

7 LAND USE PLANNING

7.1 Regardless of jurisdiction, land use planning has a universal function, in that, land use:

Planning means the scientific, aesthetic, and orderly disposition of land, resources, facilities and services with a view to securing the physical, economic and social efficiency, health and well-being of urban and rural communities.100

7.2 This chapter considers some of the key findings of the Auditor-General as they relate to land use planning. This principally concerns the valuation of the land, its alternate uses, and the determination for the best use of the site identified for the proposed gas fired power station and data centre.

7.3 As land use planning also encompasses a strategic, or macro focus, this chapter also discusses evidence received concerning strategic land use planning for the ACT.

Land valuation and alternate uses

7.4 A key feature of the findings of the Auditor-General concerned the valuation of land and its alternate uses, specifically in relation to the site identified for the proposed gas fired power station and data centre.

7.5 In the context of land valuation and alternate uses, a vital prerequisite is a cost benefit analysis. This should include not just consideration of financial return but also social, environmental and community return.

7.6 When asked whether a cost benefit analysis had been completed for the proposal, the Chief Minister commented:

This notion of what analysis was done before the statutory planner, ACTPLA, undertook an analysis of whether or not the development application should succeed, goes to the heart of this particular discussion. It is a position that the government follows now and will continue to follow. As custodians of the land

100 Canadian Institute of Planners,

http://www.cip-icu.ca/web/la/en/pa/3fc2afa9f72245c4b8d2e709990d58c3/template.asp.


4 2

for the people of the ACT, we believe that it is our responsibility to ensure that if that land is sold through a direct sale process, a non-auction process, we are duty bound to ensure that we get the highest value—a value that is determined through three independent valuations, and we take the highest. It is non-negotiable, non-debatable—three valuations by independent valuers, and we take the highest. Of course, this goes to the whole continuum, the line at which point the government decided, “Oh well, this is the highest valuation for this block of land consistent with its territory plan potential utility.” That is the basis on which the valuation is undertaken. The valuer looks at the land. The valuer says, “This land is capable of supporting this level of development and this is the value of this land for that purpose.” We get three separate valuers to go through that process. They look at the territory plan and they say, “Under this range of accepted uses of this piece of land, this is its highest value.” We then take the highest of those three valuations and say, “This is the value which we as the government demand of this piece of land for this range of purposes.” If the proponent then buys it and wants to change the use he has to change the territory plan, and we go through the whole process again and we change the notional value of the land and require them to pay that higher value through exactly the same process. So when you say no analysis was done at the highest value, yes, it was. That is the process that has been used by every government, every minister for planning, since self-government. It is the process that has been used for the last 20 years and it is the process that will be used for the next 20 years—three independent valuers valuing it at the highest value consistent with its potential use, and we accept the highest value, not the middle value, not the lowest value: the highest value. To suggest no analysis was done of the value is just absurd.101

7.7 The Committee is concerned that the Government never clearly evaluated whether this was the most appropriate use for this land in the first instance.

7.8 When the findings of the Auditor-General, as they relate to land valuation and alternate uses, are applied in an administrative context, these findings include: the decision to grant a direct sale; site selection and approval; the due diligence assessment associated with the provision of an Option for a direct land sale; and broad-acre land use. Each of these findings and related administrative aspects are discussed following.

Decision to grant a direct sale

101 Mr Jon Stanhope MLA, Transcript of evidence, 4 August 2009, pp. 18–19.



4 3

7.9 A key feature of the potential benefits falls principally within the overarching decision to grant a direct land sale as opposed to a situation where the land went to auction. This decision was further complicated when the Government decided not to reconsider the merits of the direct land sale when the proposal was amended, that is, the peaking power station was removed. When asked whether the process should have restarted after the peaking power station was removed from the proposal, the Auditor-General stated:

I believe so. The decision to grant a direct land sale, even with conditions attached to it, conferred a benefit to a commercial entity which is not normally given to other sales, such as at auction. When you give a commercial entity some unusual benefits then you have got to justify it on the basis of whether there had been additional benefits such as environmental benefit to the community. I believe, in this case, at the beginning, the security of power supply was used as one of the positive benefits to the ACT together with a data centre. It might be that big benefit that was considered, but that very significant, positive impact that the government used for a direct land sale was no longer there. For example, do we still need 21 hectares of land? Do we still have all the benefits that attached to a peaking power station? When the proposal had changed so significantly and the government did not come back and reconsider the merit of the proposal, I thought that was certainly not a good process.102

7.10 The Committee agrees with the Auditor-General’s suggestion that this was not a good process.

7.11 When asked following the removal of the peaking power station from the proposal whether the merit of the direct land sale to the consortium should have been re-assessed, the Chief Minister responded:

The merit of the direct land sale I do not think has changed at all. We have a company still proposing to spend—how many hundreds of millions of dollars in the territory? This company proposes during its existence in the territory to spend somewhere in the order of $700 million, Ms Le Couteur. I do not know what part of $700

102 Mrs Tu Pham, Transcript of evidence, 13 August 2009, pp. 59–60.


4 4

million is not deemed by the Liberals or the Greens to be a benefit to the territory.103

7.12 The Committee notes that most of the expenditure would be on capital goods (pre-fabricated units) which would be imported.

7.13 The Committee is of the view that following the removal of the peaking power station from the proposal, the security of power supply as one of the positive benefits no longer remained. This amendment to the proposal warranted a reconsideration of the merits of the proposal in terms of the decision to grant a direct sale.


7.14 The Committee recommends that should a proposal requiring the direct sale of land change significantly then the Government should formally reconsider the application.

7.15 By way of background, a direct land sale and auctioning of land are completely different processes and in some respects can yield different outcomes for a range of stakeholders.

7.16 Generally, most land sales by the LDA utilise the auction process, a competitive mechanism, which will usually realise a better return than would be obtained under a direct sale with an added emphasis of greater transparency. A direct land sale on the other hand is a method by which the Government can sell land without going through a normal competitive process. The basis on which land can be offered by direct sale requires the Government to assess, from a whole of government perspective, how it will benefit the community and contribute to the achievement of government policy objectives.104

7.17 Worthy of note is that direct land sales are not traditionally made to commercial entities. An official from the Audit Office stated:

The most common use of them is not for commercial sales, although they have 103 Mr Jon Stanhope MLA, Transcript of evidence, 4 August 2009, pp. 17–18. 104 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site




4 5

been used for commercial purposes.105

7.18 It is of note that the proponents of Canberra Technology City utilised a less than satisfactory process to request a direct grant and are yet to commence construction, while another proponent, Canberra Data Centre successfully went through the ordinary planning process. They designed, submitted a DA, received approval, constructed and now operate a data centre in Hume.

7.19 Aside from the differences outlined with regard to the different administrative ways land can be made available for sale, there are also a number of other differences between a direct land sale and auctioning of land as part of a land release program. These include: the degree of risk to the Government; whether a determination about the use of the land has been made; and community consultation opportunities in relation to determining the use of the land.

7.20 The Auditor-General raised other concerns that a direct sale changes the nature in which the project is viewed:

When land is auctioned, it has gone through the process where the government decided they had no other use for that block of land and that the best way is to sell it and get revenue for the land and let the private sector decide what to build on that land within the permissible uses of the land. But when a proponent approaches the government for a site, that is where the risk is not totally with the private sector but with the government in terms of other options for the use of the land, such as a cemetery or other things. So you cannot be a stakeholder supporting, even in principle, the project and then say that the risk is totally with the private sector. There is risk with the government there. When the land is auctioned and the price is paid by the private sector, the risk is totally with the private sector. If, for example, they put up something that may not get approval from ACTPLA or it has more objections from the community and they cannot build on it or there was a delay on it, there would be no risk to the government. The government has already got the revenue for the land. It is totally a risk for the private sector. But if the government sets aside the land for 12 months and therefore may forgo other opportunities, or it may create other issues for government departments, then the risk is with the government as well.106

105 Mr Graham Smith, Transcript of evidence, 13 August 2009, p. 60. 106 Mrs Tu Pham, Transcript of evidence, 13 August 2009, pp. 61–62.


4 6

7.21 In the case of the proposal and the offer of land by direct sale, the Auditor-General expressed a view that a full process about determining the use of the land had not been completed. The Director of Performance Audits and Corporate Services told the Committee:

If we consider what is happening in other areas of Canberra, we have got studies going out on potential uses of blocks of land. They are out for community consultation in one form or another. They are being considered within government in one form or another and a decision will eventually be made as to whether to use it for industrial land, residential land or whatever; whether to keep it for ourselves or whether to put it up for land release. In this case, we had not gone through that full process. We do know that there were alternative uses for this block of land that were being considered, including the cemetery, or a potential cemetery. We do not know whether the government went through a process that said, “Well, is it better for us to keep it for the cemetery or to release it for the data centre?” We do not believe that that sort of analysis had occurred, and this is the comment that we have made in the report about no other consideration. It is that process. I guess once we have decided that the land can be made available for public release, we are saying that we have considered all the potential uses and the way we might deal with this block of land and felt that the best way to use it is to release it commercially. The risk then goes to the buyer of that land. So the risk is borne by the consortium in this case. They then go through all of that analysis through the DA process that will require them to do the EIS, the health studies et cetera. They will pass or fail on those particular processes. So the risk goes back over there to the developer, whereas in the case at the moment we are stuck with not being quite sure whether this is the best use or whether there is some alternative use. We have not made that decision in a totally logical sense. We have not weighed up the benefits one way or the other.107

Site selection and approval

7.22 The Audit found that Government agencies did not formally assess and rank the relative merits of the proponents’ suggested sites against a clear set of criteria to ensure the best possible benefits to the Territory. A suitable site that meets the commercial needs of the proponents may not necessarily

107 Mr Rod Nicholas, Transcript of evidence, 13 August 2009, pp. 64–65.



4 7

equate to the optimum site from the Territory’s point of view, when taking into account wider public interest criteria.108

7.23 The Auditor-General told the Committee:

The government, as we found in our audit, did not have any process whatsoever in terms of listing the criteria which helped the government to rank the merit of different sites. So in that process, the government reacted to what was required by the commercial proponent rather than looking at the broader interest of the community. We think that, as a basic set of criteria, the government should have the financial implication, health outcome, social outcome, job creation and other impacts on agencies. For example, in this particular case there would be some impact on the use of land for other opportunities, like a cemetery. So those are the types of thing that we thought the government should take into account when they agreed to this site for this particular project.109

7.24 The Committee notes that a fundamental issue of concern with regard to a limited formal process for assessing and ranking the relative merits of the proponents’ suggested sites is in effect opportunity cost, in that, such a process should have regard to what other uses a potential site could be utilised for.

7.25 The Committee was interested in the Auditor-General’s views on what factors, aside from financial return, should the sale of a proposed site be assessed against. For example, how do you specify a community return, a social return and an environmental return? The Auditor-General commented:

I think the process that the government set out previously, under the direct sale of land, which required the proponent to meet a set of criteria under the disallowable instrument, is actually the type of process that we are looking for, and the type of criteria that we look at for the government to assess the merit of the site. So it is quite broad in terms of not only, as you say, financial criteria, rate of return in terms of the value of the land, but other opportunities for use of the land, and any social and environmental impact. I think the process has been set out quite nicely under the disallowable instrument for direct land sale. But in this particular case, the government departed from that and provided an option and


selection process. 109 Mrs Tu Pham, Transcript of evidence, 13 August 2009, p. 57.


4 8

had these conditions to follow, rather than requiring all of the conditions to be met before they agreed to the site.110

7.26 The Committee is concerned that the Government based its decision on a flawed analysis, ignored Treasury advice and departed from the required process thereby failing to protect the community interest.

7.27 A representative of the interest group, Canberrans for Power Relocation told the Committee:

We would say that a concept may potentially be a defined public good outcome, but without proper research and study, consultation in a meaningful sense and a cost-benefit analysis, that concept could remain just that—a concept—so the public good outcome may never happen. It is dependent on who builds it, who runs it and how those things happen.111

Option for a direct land sale/due diligence assessment

7.28 The Government decided to provide ActewAGL with a conditional Option over the land. This decision was to meet the commercial needs of the consortium for urgent security of land, and reflected the fact that the consortium was not yet in the position to meet the conditions for a direct land sale required under the relevant Disallowable Instrument.112

7.29 After the removal of the peaking power station from the proposal, and revision of the project to a smaller scale proposal, neither the Chief Minister’s Department nor the Land Development Agency reassessed the merit of the Option for a direct land sale.113

7.30 The Audit noted that:

In response to the commercial needs of, and the urgency communicated by, the consortium, the Government supported the Canberra Technology Centre proposal by committing to an Option over land without sufficient information and key documentation. The Government should have prepared a due diligence assessment of the consortium intended to carry out the project, the involvement

110 Mrs Tu Pham, Transcript of evidence, 13 August 2009, p. 57. 111 Ms Susan Penn-Turrall, Proof Transcript of evidence, 30 September 2009, p. 70. 112 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process. 113 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process.



4 9

of ACTEW (a Government Business Enterprise), as well as ensuring that the claims made by proponents were valid and substantiated. 114

7.31 A submission to the Committee noted the importance of ensuring an appropriate and independent business case assessment was carried out concerning the project, specifically commenting on the importance of an independent assessment:

…including the investment estimates (noting that the majority of the capital investment in the infrastructure (gas turbines and data warehouses) would have gone overseas—as they are pre-fabricated units …of the potential employment opportunities… …of the impact on the current data centres in Canberra…and the potential for job losses if many of the small data centres in the Government Departments were actually consolidated… …on how this particular proposal would impact on the ACT Carbon Footprint 115

7.32 Further, the submission also noted:

The importance of investigating the wider issues (carbon foot print, employment, community impact) relating to any development, but especially a commercial development.116

7.33 The Committee was interested to know whether a cost benefit analysis as suggested by the Department of Treasury had been completed. Representatives of the Chief Minister’s Department commented:

Mr Tomlins: No, I do not think a cost-benefit has been done. I guess the business plan would cover those issues.

Mr Dawes: Yes, they had to further develop that. At that point in time they had not developed that. One of the reasons we put that as a condition of the deed of option was that they had to provide that so that we could have it peer reviewed.

MR SMYTH: But it has never been provided.

THE CHAIR: But that would have been a cost-benefit. The business plan, presumably, would have been looking at it from the point of view of business. What about looking at it from the point of view of the territory?


selection process, p. 13. 115 Submission No. 3, 31 July 2009. 116 Submission No. 3, 31 July 2009.


5 0

Mr Tomlins: It is fairly easy to extrapolate the benefit for the territory from the business plan.117

7.34 The Committee acknowledges the Audit’s finding that the Government reduced key risks to the Territory by requiring the consortium to obtain an approved Development Application and to provide key information about the project, such as the business case, as conditions of a land transfer.118

7.35 Whilst the Deed of Option over the land was subject to a number of conditions which reduced the financial risks to the Territory, the key issues for consideration were the steps taken to reach the decision to grant the option in the first place.119 The Auditor-General commented:

The missing part of the consideration was that the government did not have any information, or very limited information, to know about the proposal, to know about the very basic impact of the proposal, before the government committed to setting aside the land. We acknowledge that the government put conditions on the option, to minimise the risk of transferring land to a non-viable project, but that should not substitute for the very basic due diligence that the government need to do before they make any decision whatsoever. Hence that is what we believe is the missing part of the process.120

7.36 An official from the Audit office, added:

We are happy with the elements that were in the option or the draft option, but the point was the elements in order to reach the decision to grant the option in the first place. 121

7.37 Whilst the Audit found that the existing procedures for direct land sales were followed by government agencies in the site identification process for the gas-fired power station and data centre, the Auditor-General recommended that the Government should not depart from the established and sound procedures for direct land sales unless there are compelling reasons. Further, any case to support departure from these procedures

117 Transcript of evidence, 4 August 2009, p. 11. 118 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process. 119 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site

selection process. 120 Mrs Tu Pham, Transcript of evidence, 13 August 2009, p. 58. 121 Mr Graham Smith, Transcript of evidence, 13 August 2009, p. 58.



5 1

should be clearly documented.122

7.38 The Government’s submission advised that ‘new processes were instituted during 2008 to improve the process for direct land sales by tightening the eligibility requirements’.123

7.39 As part of these new processes, the Committee has been informed that an inter-agency Assessment Panel has been established to determine whether applicants meet the statutory eligibility requirements, which are set out in the Planning and Development Act 2007, section 240(2).

7.40 Further, the Committee was informed that the CMD had been appropriately resourced to ensure that there was ‘improved rigour at the front end of the direct sale process’.124 The Committee enquired what this meant and was advised:

In order to improve rigour at the ‘front end’ of the direct sales process, the Strategic Project Facilitation group provides the secretariat role and chairs (at the Director level) the Direct Sales Eligibility Assessment Panel.125

7.41 As to the role that ACTPLA has with regard to the inter-agency Assessment Panel, the Chief Planning Executive stated:

We chair it. Our main role is to ensure that there is a forum within the ACT administration where agencies can collectively discuss the relative merits of direct sale proposals. Sometimes that will precede an actual request, so it may be that a government agency has an interest in land for a future community facility or something. We might be involved in trying to identify a site for that government agency for a facility. Obviously, we have a register of sites, particularly community facility sites. When requests are made, from NGOs, government agencies or in some cases the private sector, such as sporting groups or licensed clubs, we will go through that process.126

7.42 The Committee notes that there appears to be some confusion as to which


selection process, p. 38. 123 Submission No. 1, 29 April 2009. 124 Submission No. 1, 29 April 2009. 125 Mr Jon Stanhope MLA, Response to supplementary questions—Inquiry into Auditor-General’s

Report No 7 of 2008, 4 September 2009. 126 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 53.


5 2

agency chairs the Direct Sales Eligibility Assessment Panel.


7.43 The Committee recommends that the Government clarifies which agency chairs the Direct Sales Eligibility Assessment Panel.

7.44 The Committee was interested to know whether, as part of the process of discussing the relative merits of direct sale proposals, there was any attempt to assess and rank the sites to ensure the greatest benefit to the ACT—not just financial but also social and environmental considerations. The Chief Planning Executive stated:

No. Again, referring to an earlier Hansard, it was essentially the responsibility of the Chief Minister’s Department to determine the relative merits of the sites. So, given the characteristics of the proposal, we look at what sites are available.127


7.45 The Committee recommends that, in the case of strategic projects, a complete cost benefit analysis of the potential land uses for the site (against triple bottom line considerations) be prepared to ensure the most appropriate use and the best return for the people of the ACT.

Broad-acre land use

7.46 Planning and zoning issues are primarily the responsibility of ACTPLA. ACTPLA does not have a direct role in site identification or selection. It provides public information and also advice on requests relating to the Territory Plan, and thereby assists proponents to identify land with suitable zoning.128

7.47 The Audit report found that the definition of broadacre land was ambiguous, and this may create uncertainty to residents and industry, and may expose the Territory to potential legal risks and planning delays.129

127 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 53. 128 ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site





5 3

7.48 The Auditor-General recommended130 that:

To provide greater certainty for the business sector and the broader ACT community, ACTPLA should:

clarify the purposes for which broadacre land may be used, as defined in the Territory Plan, and

as far as is practical, ensure definitions are consistent with those in the National Capital Plan.

7.49 In its submission, the Government agreed-in-principle with the Auditor-General’s recommendation stating that while ACTPLA makes every effort to ensure definitions in the Territory Plan are consistent with the National Capital Plan, there is always likely to be instances where the definitions do not align. This reflects that the National Capital Plan is a Commonwealth document responding to the specific interest of the Commonwealth, whereas the Territory Plan is ACT legislation responding to the particular needs and responsibilities of the Territory. Further, the content of the National Capital Plan is part of Commonwealth legislation and hence outside the jurisdiction of Territory agencies.131

7.50 The Government also added, that however tight a planning term definition, there will always be room for ambiguity and legal uncertainty about the term’s application to a ‘specific circumstance.’132

7.51 With regard to planning definitions, the Chief Planning Executive told the Committee:

There is always that potential, whether it is a communications facility, a DFO or something else. People contest the interpretation of the Planning and Land Authority, but that is our job. It is our role to interpret the territory plan as we see fit…

…We understand that there are others who would contest our interpretation, and do not question the fact that the Auditor-General finds that there are different

130 Recommendation No. 2 – ACT Auditor-General’s Report No. 7 of 2008: Proposal for a gas-fired power

station and data centre—site selection process. 131 Submission No. 1, 29 April 2009. 132 Submission No. 1, 29 April 2009.


5 4

interpretations. That is why planning processes are also subject, at times, to judicial review.133

7.52 In relation to work concerning clarification of the purposes for which broadacre land may be used, as defined in the Territory Plan, the Chief Planning Executive commented:

We have already provided advice to the minister, who asked us to follow up on that recommendation—to provide him with advice, particularly, on where the sites exist. There are a lot of known sites—the big broadacre land use sites, such as out to the west of the city and to the east of the city. But there are a lot of island sites that sit within the city—in Curtin, in Belconnen—which many people would not be familiar with; they just take it to be their local park and they just see it as open space. We provided some advice to the minister in terms of how they may be progressively changed through amendments that may be occurring or variations, more particularly through the territory plan review process, which at least two members of the committee may be familiar with, and as we progress through the review of all of our policies, the opportunity exists to clarify that. In terms of seeking consistency with definitions in the national capital plan, that is not entirely within our control.134

Strategic land use planning for the ACT

7.53 Whilst the ACT Government’s Canberra Spatial Plan, which was updated in 2008, goes someway to towards setting out a strategic direction for the future growth of Canberra, the Planning Institute of Australia (ACT Division) is of the view that it is an incomplete work and also disaggregated from the Sustainable Transport Plan 2004 and infrastructure planning.135

7.54 The Planning Institute of Australia (ACT Division) told the Committee that:

…the current Planning and Development Act provides for a strategic overview plan. It is called the planning strategy. We are very much of the opinion that the government should invest some time and resources into developing that particular plan. I am mindful that the national capital plan, metropolitan plan, has not been updated for 16 years or more, that the Canberra plan and the spatial

133 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 39. 134 Mr Neil Savery, Transcript of evidence, 12 August 2009, p. 39. 135 Submission No. 4, 31 July 2009.



5 5

plan are both non-statutory documents and that the planning strategy really gives you an opportunity to advance your thinking in a new direction, perhaps picking up some of the climate change issues et cetera. We would encourage the government to resource that and develop it, ideally in conjunction with the commonwealth, so that it is an overarching document that is coherent to both planning frameworks.136

7.55 In its submission, the Planning Institute of Australia (ACT Division) makes a number of observations with regard to current governance arrangements and their subsequent impact on the capacity to carry out strategic planning and facilitate projects of territory significance.137 This includes:

the role of the CMD in major project facilitation, economic development, land supply and infrastructure strategy appears to override ACTPLA’s strategic planning capacity138

ACTPLA is at its most effective as a development assessment agency where it focuses primarily on ensuring that the strategic vision is realised through adherence to the Territory Plan and the Planning and Development Act 2007139, and

the multiple roles of the Department of Territory and Municipal Services (TAMS) in sustainable transport planning and management of public infrastructure, along with facilitation of heritage and environmental protection suggest that TAMS has a significant role in determining any strategic planning outcome. Consequently, TAMS needs to be better resourced to provide key input to the preparation of a planning strategy along with the necessary infrastructure to support its implementation.140

7.56 The Committee was interested to know whether the Minister for Planning had any thoughts on separate arms of government being responsible for different administrative aspects of planning in the ACT. The Minister commented:

136 Mr Hamish Sinclair, Transcript of evidence, 28 October 2009, p. 94. 137 Submission No. 4, 31 July 2009, p. 4. 138 Submission No. 4, 31 July 2009, p. 4. 139 Submission No. 4, 31 July 2009, p. 4. 140 Submission No. 4, 31 July 2009, p. 5.


5 6

I think there are pros and cons regarding any administrative system. There are some advantages in having a separation that enables the planning authority to be completely independent. You could look at different models, and I would welcome the committee’s thoughts on that.141

7.57 The Committee considers that there is some merit in examining the current roles played by various agencies of ACT Government in strategic planning in the ACT with a view to establishing a sustainable strategic planning framework. Such a framework will not only guide future sustainable growth in the ACT but would also enable the issues related to the administration and facilitation of major development proposals to be managed more effectively.142


7.58 The Committee recommends that the Government create an ACT Planning Strategy as required by the Planning and Development Act 2007. The Strategy should be prepared by the Chief Minister’s Department and should integrate infrastructure, transport, energy, land use, economic, population, environmental, and social issues. There should be significant community involvement in the strategy.


7.59 The Committee recommends that, as part of the establishment of the Department of Land and Property Services and the creation of an ACT Planning Strategy, the Government critically examine the current roles played by agencies in strategic planning in the ACT with a view to establishing a sustainable strategic planning framework.

141 Mr Andrew Barr MLA, Transcript of evidence, 12 August 2009, pp. 37–38. 142 Submission No. 4, 31 July 2009.



5 7

8 WHOLE OF GOVERNMENT WORKING

8.1 The decision-making process relating to the site selection for the proposed gas-fired power station and data centre required an integrated and coordinated response to a particular issue from multiple internal and external stakeholders. Projects like this are an essential feature of modern government and require effective whole of government working.

8.2 The Committee’s inquiry has considered the findings of the Audit report within this context with a view to drawing lessons which can be applied to future cross-agency, service-wide or whole of government work in the ACT public sector.

Whole of government working

8.3 ‘Whole of government working’ is one of a number of terms including joined-up, horizontal, strategic, connected, holistic, cross-agency, service-wide, integrated and collaborative government that have similar meanings.

8.4 Notwithstanding diversity in nomenclature, these terms encompass an approach that calls for governments to respond and adapt to the complex and diverse contemporary environment in which they operate.143 As an approach it is concerned with improving collaboration and integration to better respond to policy, program management and service delivery issues.144

8.5 Broadly speaking, whole of government working can operate across:

143 Briggs, L. (2005) A Passion for Policy—Policy and whole of government working in J.Wanna (ed.)

A passion for policy—Essays in Public Sector Reform, ANU E-Press. 144 VSSA. (2007) Joined up government—A review of national and international experiences, Working paper

no. 1, Victorian State Services Authority (VSSA).


5 8

portfolios or departments within a tier of government (such as ACT Government)

different tiers of government, and

government and other sectors (private, NGO145, voluntary), or the community.146

8.6 A key challenge with whole of government working in a Westminster system of Cabinet Government is that it highlights the inevitable tension that exists between:

…horizontal responsibilities in working across organisational boundaries and the vertical accountabilities embedded in the Westminster system of Cabinet Government, in which the existence of separate portfolio agencies reflects an underlying accountability of individual Ministers to Parliament.147

8.7 Notwithstanding this tension, the flexibility that arises from working horizontally can encourage more innovative solutions and can also lead to better solutions for many of the contemporary challenges faced by the public sector. However, the challenge for whole of government working:

…is to find the infrastructure, processes and practices that might promote better connections and remove any obstacles to collaboration…These include relevant skills and culture, an information-sharing infrastructure and governance arrangements that focus accountability on the whole of government outcomes the government is seeking.148

8.8 The impetus for public sector jurisdictions across the globe to consider the adoption of whole of government approaches have included: public administration trends; community expectations; increasing global and technological innovation; and the complex nature of contemporary policy

145 Non-government organisations (NGOs) 146 VSSA. (2007) Joined up government—A review of national and international experiences, Working paper

no. 1, Victorian State Services Authority (VSSA). 147 APSC. (2007) Tackling wicked problems—A Public policy perspective, p. 23. 148 MAC. (2004) Connecting Government—Whole of Government Responses to Australia’s Priority Challenges,

p. 23.



5 9

challenges.149 The concept does not replace vertical ways of working but instead complements vertical structures.150

Successful whole of government working

8.9 Whole of government working requires new ways of working and change on the following four key dimensions:

internally to develop new skills and cultures

horizontally to form partnerships

vertically and horizontally to find appropriate accountability and performance management systems, and

externally to find new ways to work with citizens.151

8.10 The greatest challenge for the public sector in terms of being successful at whole of government working is that public sector institutions and structures, in a large part, were not designed with a primary goal of supporting collaborative inter-organisational work. The limitations presented by this infrastructure mean that:

It can be challenging to implement governance arrangements and foster cultures that facilitate collaboration across internal organisational boundaries within hierarchical, vertically structured organisations.152

8.11 Whilst the need for effective whole of government approaches continues to grow and its uptake is becoming increasingly prevalent in public sector jurisdictions, the Australian Public Service Commission’s State of the Service Report 2005–06 concluded that whole of government working was not yet

149 APSC. (2008) State of the Service Report—State of the Service series—2007-08; APSC. (2007) Tackling

wicked problems—A Public policy perspective, pp. 18–19; VSSA. (2007) Joined up government—A review of national and international experiences, Working paper no. 1, Victorian State Services Authority (VSSA).

150 Christensen, T. & Lægried, P. (2006). NPM and beyond: The second generation of reforms. National Association of Schools of Public Affairs and Administration Annual Conference, Minneapolis, USA; VSSA. (2007) Joined up government—A review of national and international experiences, Working paper no. 1, Victorian State Services Authority (VSSA).

151 VSSA. (2007) Joined up government—A review of national and international experiences, Working paper no. 1, Victorian State Services Authority (VSSA), p. 13.

152 APSC. (2007) Tackling wicked problems—A Public policy perspective, p. 17.


6 0

natural to public servants, on the basis that it requires a fundamentally different approach to working and that it would take many years to embed.153

8.12 The notion that whole of government working requires new ways of working, none more so than in the areas of accountability and performance arrangements, is acknowledged in a report commissioned by the Chief Minister’s Department in 2009, Performance and Accountability in the ACT—Towards a New Framework154. That report suggests that implementation of a new principles-based accountability framework, amongst other things, requires a renewed focus on the organisational culture and performance focus of agencies and the processes that underpin strategic planning and priority setting (including at a whole of government level and at an agency level).155

8.13 Whole of government working should also involve government organisations acknowledging the valuable role the Legislative Assembly and its committee system can play in ensuring a wide range of views are considered as part of the policy-making process.

Outcomes of whole of government working

8.14 Whole of government working has considerable potential to improve public services by:

taking a wider view than a single agency or portfolio

taking on intractable social issues

improving service delivery through the provision of more accessible and straightforward access to government services, for example, one stop shops for interacting with government such as Canberra Connect

153 APSC. (2006) State of the Service Report—State of the Service series—2005-06. 154 Allen Consulting Group. (2009) Performance and Accountability in the ACT—Towards a New Framework

(A report commissioned by the ACT Government—Chief Minister’s Department). 155 Allen Consulting Group. (2009) Performance and Accountability in the ACT—Towards a New Framework

(A report commissioned by the ACT Government—Chief Minister’s Department), pp. v–vi.



6 1

promoting innovation by bringing together views and perspectives from different organisations and backgrounds,

improving cost effectiveness—by identifying duplication and realising economies of scale, for example, through collective purchasing power156, and

helping coordinate overall government strategies – particularly relating to prioritising spending.

8.15 The Committee is of the view that the capability to work horizontally requires employees to be able to position their work and expertise in the context of their agency and the contribution they can make to achievement of government objectives, whether that be as an equal partner in a strategic project, from a whole of government perspective, or where an agency’s perspective is being sought as part of a strategic project. This can be assisted by developing the right culture and capabilities to support whole of government work. This includes awareness of the protocols for relationships between internal and external stakeholders.

8.16 The Committee considers that the development of whole of government guidelines or policy on working collaboratively would be useful in assisting the development of an appropriate culture and capability to support whole of government work.


8.17 The Committee recommends that the ACT Commissioner for Public Administration develop good practice guidelines for whole of government working in the ACT Public Service (ACTPS). The Guidelines should encompass the key principles of whole of government working and provide clear direction on the roles and responsibilities of ACTPS employees when working collaboratively on whole of government projects, programs or service delivery. This

156 UKNAO (2001) Joining Up to Improve Public Services, report by the UK Comptroller and Auditor-

General, 7 December; VSSA. (2007) Joined up government—A review of national and international experiences, Working paper no. 1, Victorian State Services Authority (VSSA); APSC. (2007) Tackling wicked problems—A Public policy perspective.


6 2

would include information management, external communications, budget and performance management issues.

Appropriate budget and accountability frameworks

8.18 Effective whole of government working requires the creation of horizontal accountability and transparency frameworks that reflect shared responsibility for outcomes and also support the connection of vertical and horizontal lines of accountability.157 A key government system that can be used to develop and support such frameworks is the budget process. The literature suggests that to some degree, the use of the output and outcomes framework for government budgeting has made it easier to support whole of government approaches across portfolios or organisational boundaries. However, as some collaborative approaches do not easily or neatly fit into outputs, the budget framework can be challenging to whole of government working.158

8.19 The Government advised that the:

Complexity and multifaceted nature of Government activity (and also the nature of Government reporting requirements) make it difficult to readily apportion outcomes and work across agencies, though it is one of the most important tasks of central agencies like CMD and Treasury to facilitate cross-agency understandings and behaviour.159

8.20 There is some discussion in the literature of the need for respective public sector jurisdictions to further clarify the potential of the outcome and output budget framework to support cross-agency initiatives. This should also include consideration of the potential barriers to apportioning outcomes across agencies and/or portfolios.160

8.21 The Committee suggests that the development of good practice guidelines for whole of government working in the ACTPS, amongst other things, should be informed by the views of chief executives of ACT Government

157 Australian Public Service Commission (APSC), State of the Service Report 2006–07, 2007. 158 VSSA. (2007) Joined up government—A review of national and international experiences, Working paper

no. 1, Victorian State Services Authority (VSSA), p. 7. 159 Mr Jon Stanhope MLA, Response to Supplementary Questions, 4 September 2009. 160 Australian Public Service Commission (APSC), State of the Service Report 2007–08, 2008.



6 3

agencies and authorities on the application of the output and outcome budget framework to whole of government working.

8.22 Performance management and incentives also need to support joined up government. Currently, incentives or achieving organisational aims can be stronger than the rewards for horizontal achievements. With a strong focus on performance management, agencies can be tempted to ignore issues that require shared responsibility.161 Whilst successful whole of government working thus requires shared performance indicators, these also need to be aligned with incentives and reporting systems.162


8.23 The Committee recommends that the Government consider making changes to the budget and accountability frameworks to support cross-agency initiatives. In particular, where possible, agency performance measures should be amended to facilitate whole of government working. This should be done without undermining appropriate accountability and reporting measures for each agency.

161 Mulgan, G. (2005) Joined up government: Past, present and future in V. Bogdanor (ed.), Joined up

Government: OUP/British Academy. 162 VSSA. (2007) Joined up government—A review of national and international experiences, Working paper

no. 1, Victorian State Services Authority (VSSA), p. 7; Pollit, C. (2003) Joined-up government: a survey, Political Studies Review, 1, pp. 34–39.


6 4



6 5

9 CONCLUSION

9.1 The Committee acknowledges the views presented and the findings made in Auditor-General’s Performance Audit Report No. 7 of 2008.

9.2 The Committee again thanks all those who have contributed to its inquiry, by making submissions, providing additional information, and/or appearing before it to give evidence.

9.3 The Committee has made 18 recommendations in relation to its inquiry into Auditor-General’s Performance Audit Report No. 7 of 2008: Proposal for a gas-fired power station and data centre—site selection process.

Caroline Le Couteur MLA

Chair

2 February 2010


6 6



6 7

APPENDIX A: List of written submissions

Written submissions received by the Committee:

No. 1 ACT Government

No. 2 Ms Susan Gray—Individual

No. 3 Mr Rodahn Gibbon—Individual

No. 4 Planning Institute of Australia—ACT Division

No. 5 Canberrans for Power Station Relocation Incorporated (CPR Inc.)

No. 5a Supplementary submission—CPR Inc.

No. 5b Supplementary submission—CPR Inc.

No. 5c Supplementary submission—CPR Inc.


6 8



6 9

APPENDIX B: Committee public hearings

List of witnesses who appeared before the Committee at public hearings:

Public hearing of Tuesday 4 August 2009

Mr Jon Stanhope MLA, Chief Minister

Mr David Dawes, Deputy Chief Executive, Business and Projects Division, Chief Minister’s Department (CMD)

Mr George Tomlins, Executive Director, Strategic Project Facilitation, CMD

Public hearing of Wednesday 5 August 2009

Ms Katy Gallagher MLA, Minister for Health

Mr Ian Thompson, Acting Chief Executive, ACT Health

Dr Charles Guest, Chief Health Officer

Mr John Woollard, Director, Health Protection Service, ACT Health

Public hearing of Wednesday 12 August 2009

Mr Andrew Barr MLA, Minister for Planning

Mr Neil Savery, Chief Planning Executive, ACT Planning and Land Authority (ACTPLA)

Mr Ben Ponton, Director, Development Services Branch, ACTPLA

Mr Vic Smorhun, Manager, Communications Team, Communications and Government Services, ACTPLA


7 0

Public hearing of Thursday 13 August 2009

Mrs Tu Pham, ACT Auditor-General

Mr Rod Nicholas, Director, Performance Audit and Corporate Services

Mr Graham Smith, Senior Audit Manager

Public hearing of Wednesday 30 September 2009

Mr Bill Reid, President, Canberrans for Power Relocation Incorporated (CPR Inc.)

Mr Dugald Holmes, Representative, CPR Inc.

Ms Susan Penn-Turrall, Representative, CPR Inc.

Public hearing of Wednesday 7 October 2009

Mr Mark Sullivan, Managing Director, ACTEW Corporation Limited

Public hearing of Wednesday 28 October 2009

Mr Hamish Sinclair, Planning Institute of Australia (ACT Division) (PIA ACT)

Mr Tony Adams, PIA ACT

Public hearing of Friday 27 November 2009

Mr Michael Costello, Chief Executive Officer, ActewAGL

Mr John Mackay, Chairman, ActewAGL

Mrs Dianne O’Hara, General Manager, Business Development and Strategy, ActewAGL



7 1

APPENDIX C: Audit report recommendations

Summary of Audit report recommendations and the Government’s response.

Audit report recommendation163 Government response164

Recommendation No. 1—To enhance accountability and to provide clarity to the community and private sectors about the requirements associated with a request for strategic project facilitation status, Government should adopt criteria to define a strategic project and the strategic project facilitation process. In consultation with relevant agencies, the Strategic Projects Facilitation Unit should develop these criteria, which would identify when, how and what is required of proponents in relation to issues such as:

a business case; financial analysis; a statement of financial and other risks, with appropriate risk allocation

and mitigation measures; environmental and health impacts; planning approvals; a plan for appropriate consultation

with the general community and identifiable stakeholders; and

coordination arrangements.

AGREED—The Government’s submission outlined criteria to define a strategic project and the strategic facilitation process. The criteria to define a strategic project or program involve one or more of the following: the project is strategically significant to the ACT,

e.g. economic or environment benefit, introduces new skills or technology

Government approvals are required in relation to release and/or identification of land/buildings

Complex/sensitive approvals or Australian Government approvals are required e.g. National Capital Authority or Environmental Protection and Biodiversity Conservation Act approvals

the project impacts significantly on ACT infrastructure

project would benefit from whole-of-government (WHOG) coordination by the Strategic Project Facilitation group (SPF), and

the project is associated with a key Government priority.

The strategic facilitation process, in so far as it involves the Chief Minister and CMD, generally involves one or more of the following: progressing the implementation of a specific

Government funded activity – e.g. arboretum, WHOG building

with the relevant agency, assess if the development proposal has met strategic project definition criteria and advise Government accordingly

SPF progresses the proposal through the statutorily independent assessment system without interfering with formal assessment by responsible officers in Government agencies

providing services to the proponent including advice on: site selection, regulatory/approval agencies, advocacy within Government, issues affecting the project, and industry links

assist proponent to understand their requirements including need for an appropriate community engagement strategy at an early stage for sensitive projects

track progress of the DA or Land Sale Application


selection process. 164ACT Government submission (Submission No. 1), 29 April 2009.


7 2

Audit report recommendation163 Government response164 and with agencies, identify any obstacles to a projects’ progress

Ministers/departmental officers required to treat a strategic project as a very high priority within their portfolios, and

where appropriate, advise the Chief Minister/Minister for Business and Economic Development of need to consider policy/procedural changes as a result of experiences coordinating project/program

The Government commented that the details of “what, when, and how” required of proponents regarding a business case, financial analysis, environmental/health impacts, planning approvals, community consultation etc are “generally not for CMD to determine but is the responsibility of relevant Government agencies.” For example, the Department of Treasury may advise on nature of business case/financial analysis. However, in the light of experience gained by the site selection process, the proponent of any significant project will be advised of the need to prepare a formal community engagement strategy at the pre-Development Application stage.

Recommendation No. 2—To provide greater certainty for the business sector and the broader ACT community, ACTPLA should: clarify the purposes for which broadacre

land may be used, as defined in the Territory Plan, and

as far as is practical, ensure definitions are consistent with those in the National Capital Plan.

AGREED IN PRINCIPLE—While ACTPLA makes every effort to align the definitions in the Territory Plan to those in the National Capital Plan, there is always likely to be instances where the definitions do not align, reflecting the fact that the National capital Plan is a Commonwealth document responding to the Commonwealth’s specific interest whereas the Territory Plan is ACT legislation responding to our particular needs and responsibilities. In short, the context of the National Capital Plan is outside ACTPLA’s control and it does not operate at the same level of detail as the Territory Plan. The Government adds that however tight a planning term definition, there is always room for ambiguity and legal uncertainty about the term’s application to a ‘specific circumstance.’

Recommendation No. 3—Government should not depart from the established and sound procedures for direct land sales unless there are compelling reasons. Any case to support departure from these procedures should be clearly documented.

AGREED—Despite the finding that the Government followed existing procedures for direct land sales, new processes were implemented in 2008 to improve the process and tighten eligibility requirements. Furthermore, the Government established an inter-agency assessment panel (chaired by CMD) to determine if proponents meet statutory eligibility requirements as outlined in the Planning and Development Act 2007 [section 240 (2)]. As a further measure, the Panel requires applicants to demonstrate their financial capacity to “undertake the proposed development on the land they are seeking to acquire.” The Chief Minister is advised of the outcome. The Government has provided resources to CMD to improve “rigour at this front end of the direct sales process.”

Recommendation No. 4—Agencies should

AGREED—The Government has agreed to refresh the



7 3

Audit report recommendation163 Government response164

ensure their community engagement practices reflect the principles and better practices inherent in the ACT Government Community Engagement Service Charter and Community Engagement Manual. In particular, agencies that are involved in facilitating strategic projects should assess the need for early and appropriate community consultation.

community engagement frameworks based on current best practice and is reviewing and updating the ACT Guide to Engaging with the Community. The Government has also agreed that CMD should work with agencies to further develop an approach to community engagement that would include Community It is the view of Government agencies that pre-DA consultation on a proponent driven proposal is not, nor should, the responsibility of ACTPLA (as distinct to ACTPLA’s statutory requirement to notify and receive submissions on the DA once it is lodged). Were there to be a generalised requirement or community consultation to take place before a DA (or Environmental Impact Statement)was lodge, the following issues may arise: - uncertainty in the planning and assessment

process resulting in a perception of the ACT has a difficult place to invest

- the public incorrectly believing the Government is committed to a project

- unnecessary public angst as answers to questions raised during consultation by community may not be known early in the process

However, as stated in the response to Recommendation 1, in light of the experience gained by the site selection process for the data centre/power station, any sensitive or complex strategic proposal will be required to submit a formal community engagement strategy to CMD. The strategy should identify possible issues and outline the proposed consultation process to take place before the DA is submitted.

Recommendation No. 5—Agencies should ensure a high level of probity in dealing with the Territory owned businesses and their commercial partners such as ActewAGL by: clearly identifying the status and the nature

of business dealings, i.e. whether they are of a commercial or of a government nature;

adopting an arm’s length approach to all business dealings, which recognises that such bodies are generally established to operate in a commercial manner; and

communicating clear processes to relevant agencies and staff.

AGREED—It remains the agencies’ view that a high degree of probity is exercised by agencies dealing with Territory owned businesses and their commercial partners. Agencies are generally aware of the status of commercial (as opposed to government entities), and adopt a professional, arms-length approach in their business dealings with such organisations.


7 4



7 5

APPENDIX D: Additional comments from

Brendan Smyth MLA

Additional comments from Brendan Smyth MLA

The Community

I am concerned at the approach adopted by the ACT Government to the

consideration of the proposal from Canberra Technology City (CTC). The

findings by the Auditor‐General and evidence provided to this Committee

demonstrate that the process followed by the ACT Government in

considering the proposal from CTC was poor. The failings of process

involved both the overall consideration of what was a major strategic project

and the consideration of an appropriate site for the data centre and power

station.

It is clear that the community felt frustration, disengagement and

disempowerment, particularly due to the advocacy of the Chief Minister for

these projects. The proposal from CTC was substantial and involved what

was claimed to be a very significant investment in the ACT.

The response of one submission to the Committee from Canberrans for Power

Station Relocation Incorporated (CPR Inc), however, noted a most

unsatisfactory approach from the ACT Government: “The Government

acknowledged it was an unusual project yet did nothing to engage the

community...”1

This submission from CPR Inc was also very critical of the approach that the

ACT Government adopted to consulting with the community on this

proposal: “Consultation is meaningless unless those who are being consulted

with are being listened to and have a rational chance of being heard.

Consultation in the ACT is lip service.”2

The CPR Inc submission summarised its disappointment with the approach of

the ACT Government: “During this entire power station fiasco – this

Government has never acknowledged the concerns of the community, never

praised or supported the efforts the community put into responding and

compiling researched and accurate responses to this development, attending

meetings and engaging...”3

1 CPR, Supplementary Submission No. 5a, p. 1. 2 CPR, Supplementary Submission No. 5a, p. 8. 3 CPR, Supplementary Submission No. 5a, p. 8.

1

The reaction of the Chief Minister to community frustration was to denigrate

those who questioned him. When difficult issues arose after the nature of the

proposal became know throughout the community, the ACT Government

sought to downplay the nature of the concerns or even not to acknowledge

their seriousness.

As CPR commented: “The Chief Minister actually directly blamed those

members of the community who had considered the application, gained

independent assistance on interpreting the complex reports and placed a

submission which pointed out the development was unsafe, unhealthy,

unreasonable and immoral...”4

CPR Inc concluded that: “Perhaps the biggest lesson the community has

learned is that consultation is pointless, planning does not exist and the

Government will have made its mind up long ago...”5

I am disappointed that the ACT Government has not acknowledged the

extent of concern that existed in the community about the original proposal

from CTC. Even though the proponents of the proposal ultimately scaled

down the magnitude of the data centre project and removed the power station

entirely, the ACT Government has steadfastly refused to apologise to the

community for the concerns that arose after the proposal was first publicised.

Recommendation 1

I recommend that the ACT Government, through the Chief Minister, issues

an apology to the Canberra community and, particularly, to the residents of

Tuggeranong, for the failure of the ACT Government to take fully into

account public concerns about the proposal from CTC.

Role of the Chief Minister

The Chief Minister was a strong supporter of the project from the very start.

Putting the weight of his position behind the project had the effect of adding

to the credibility of the project and whether intended or not would certainly

have had influence on the discussion in and the progress of the proposal

through the ACT bureaucracy.

4 CPR, Submission No. 5, p. 11. 5 CPR, Supplementary Submission No. 5a, pp. 8–9.

2

During the course of the inquiry however the committee was told that the

power station element of the proposal “did not make commercial sense”.

Mr Costello: As I said, AGL felt that it was too small, that if it was

going to build a gas‐fired power station in the ACT it had to be much

bigger to be an economic proposition, to fit into their plans.

MR SMYTH: So was 110 megawatts financially viable?

Mr Costello: It was financially viable but it did not make commercial

sense as

something that was supplying the grid. They said, “If you want to

build a peaking power plant, 110 megawatts is too small.”

MR SMYTH: Wouldn’t you have had that discussion before you started

this process? If you knew that it was financially—sorry, what were the

words you used? It was financially viable—

Mr Costello: We could have funded it, yes. In that sense, we could have

funded it. We had the money to fund it. We have zero debt at the

moment, so we were very financially strong. We could have funded it,

but, as I said, in December the board said, “Let’s go ahead with this

beyond the early consideration we’ve been giving, and let’s consider

whether both projects make sense.” AGL finally came to the conclusion

that in their view it did not. It was a bit disappointing to us, but that is

where they ended up. They said, “We’ve looked at it again, and as far

as we’re concerned it’s too small.”

The discussion continued…

MR SMYTH: Can we go back to your statement that you could afford

to pay for it but it was not commercially viable. Why wasn’t that

known before the DA was put in, the original DA?

Mr Costello: We wanted to put the DA in to get the thing going. I must

say, to be fair, AGL seemed to be more interested and later on they

came to the view that it was a commercial thing: “We’ve looked at this

again and we’ve finally come to the conclusion we don’t think it’ll

work.” As I say, it was disappointing from one point of view because

we had always wanted a peaking power plant. Let us be honest.

Depending on what the energy policy is that comes out of the

Assembly, we still would like to build one because we think it fits into

3

our interests and into the transition to a completely carbon‐free energy

system, and clearly it does. We were disappointed in that sense. But, as

I said, I suppose I felt a sense of relief that the size of this would come

down and that should make it a bit easier for us to get more

community support. I must say that, when it was reduced to 28

megawatts and the only impact of that seemed to be to accelerate

concern, I was a bit disappointed.6

As the Auditor‐General points out:

2.35 ActewAGL prepared an economic impact statement for the initial

CTC proposal. Treasury indicated its view that that this document was

unreliable...

2.36 ActewAGL stated the value of the original CTC project to be

around $2 billion, The Government quoted these figures in various

forums without testing them.7

The question needs to be answered how a proposal that “did not make

commercial sense,” where ACT Treasury had advised the Government that

the information supplied in the economic impact statement was “unreliable”

and used figures “without testing them” was given so much support from the

Chief Minister.

These extracts clearly suggest that the Chief Minister’s support of the 110kW

project was not based on commercial advice from ACTEWAGL, nor the

financial advice from his own treasury department.

It then leads to the conclusion that much of the motivation must have been

purely political or at best an example of very poor governance and

judgement.

Role of the Auditor‐General

The ACT Auditor‐General has performed an essential role in examining

aspects of the ACT Government’s process of considering the proposal from

CTC for a data centre and a gas‐fired power station. In principle, the Auditor‐

General has the capability and support to undertake inquiries that are

6 Transcript of evidence, 27 November 2009, pp. 115 and 116. 7 ACT Auditor‐General’s Report No. 7 of 2008: Proposal for a gas‐fired power station and data

centre—site selection process, pp. 17 and 18.

4

5

intended to ensure greater efficiency and effectiveness in the use of the

community’s resources.

I am concerned, however, that the capacity of the Auditor‐General to

undertake the inquiry into the site selection process was restricted because of

pressure on the resources available to the Auditor‐General.

This concern was reinforced by the submission to the Committee from CPR

Inc about the role of the Auditor‐General. In emphasising that politicians are

not above reproach and that they should have their actions questioned and

audited, CPR concluded: “CPR...recommends that the Auditor‐General be

given greater funding and greater authority to audit, inspect and implement

recommendations.”8

I endorse the conclusion reached by CPR that: “The importance of the

Auditor‐General and her role can not be under‐estimated within the

governance system Canberra currently labours under.”9

Recommendation 2

I recommend that the Auditor‐General be provided with additional

resources to increase the capacity of the Auditor‐General to undertake

additional performance audits.

Recommendation 3

I recommend that the ACT Assembly passes the Auditor‐General

Amendment Bill 2009 when brought on for debate to ensure the

independence of the Auditor‐General.

Brendan Smyth MLA

5 February 2010

8 CPR, Submission No. 5, p. 9. 9 CPR, Submission No. 5, p. 36.

pac - review of ag's rpt no 7 of 08 - parliament.act.gov.au · 1 act legislative assembly,...

Documents