Labor will push for a parliamentary inquiry into revelations the government paid $26.7m above the fair value for a parcel of land at the Western Sydney airport owned by a Liberal donor that will not be used until after 2050.
Two members of the federal joint committee of public accounts and audit – Labor’s deputy chair, Julian Hill, and senator Rex Patrick – told Guardian Australia the $30m purchase from the Leppington Pastoral Company should be investigated.
The auditor general on Monday released a scathing report finding the government paid the company 10 times the fair value for the 12.26 hectare triangular parcel of land in Bringelly, adjacent to the site of Sydney’s second airport.
In the July 2018 sale, the federal government paid a rate 22 times higher than the New South Wales government paid for its portion of the so-called Leppington Triangle, which will be used for a second runway after 2050.
On Tuesday, the cities and urban infrastructure minister, Alan Tudge, distanced himself from the controversy by claiming there was “no question of ministerial involvement”. The infrastructure department has launched an investigation into alleged unethical conduct by its staff and, separately, a review of the transaction.
Nevertheless, the department has defended the “unorthodox” valuation, arguing it paid a premium to avoid costly legal disputes because the Leppington Pastoral Company had previously fought a compulsory acquisition valuation in the 1990s.
The company – operated by billionaire brothers Tony and Ron Perich – has donated a total of $176,600 to the Liberal party since 2002, including $58,800 in 2018-19.
The shadow infrastructure minister, Catherine King, told Sky News on Tuesday the government had questions to answer, including how ministers could “allow such a blatant waste of taxpayers’ money”.
King said the departmental inquiry was “the government inquiring into itself”. “I think that really there needs to be much more scrutiny from the parliament in relation to this matter,” she said.
Hill told Guardian Australia the auditor general’s report was “truly shocking” and the “powerful joint committee of public accounts and audit must launch a public inquiry into this to get to the bottom of what’s really gone”.
“What did the minister know? Was this gross bureaucratic incompetence and unethical behaviour? Or did it drift into political corruption?” he said.
Patrick, a crossbench member of the audit committee, said the sale “does warrant examination”. “This is deja vu. We’ve had Watergate in 2017 and now Runwaygate,” he said, referring to the $80m water deal approved by the water minister at the time Barnaby Joyce in 2017.
The committee’s chair, Liberal Lucy Wicks, said only that the call for a further inquiry will be determined “in accordance with usual practice”. If the audit committee does not proceed with an inquiry, Labor could attempt to set up a separate Senate inquiry with crossbench support.
The auditor general found the department acted unethically by failing to advise decision-makers how much it proposed to pay the landowner and by not providing accurate answers when it investigated the sale.
In July 2018, the minister at the time Paul Fletcher was advised the land had been valued at $30m, but the department failed to advise that the federal government was intending to pay over 20 times more per hectare than the NSW government.
A spokesperson for Tudge said the purchase strategy – developed in consultation with the department of finance and the Australian government solicitor - was “designed to mitigate the risk of costly and lengthy legal challenges”.
“There is no question of ministerial involvement. It goes to the administrative actions of the department, more than two years ago,” the spokesperson said. “The department is investigating matters of staff conduct identified by the [auditor general].”
The auditor general rejected the department’s fears the project could be “held captive” to a dispute, noting the federal government can compulsorily acquire land with appeals to determine correct compensation occurring after the sale.
An infrastructure department spokesperson said the auditor general’s report “identifies serious matters that require appropriate investigation”.
The staff investigation will “follow the due process of a formal investigation with an independent investigator”.
“The department is also undertaking an independent review of the transaction, by an independent auditor, to ensure any further problems in departmental processes are identified and addressed.”