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Minister agrees department acted unethically over $30m purchase of Western Sydney airport land

<span>Photograph: Mike Bowers/The Guardian</span>
Photograph: Mike Bowers/The Guardian

Communications minister Paul Fletcher has agreed it was “unethical” for infrastructure department officials to claim it was “reasonable” to pay $30m for land at Western Sydney airport, 10 times its fair value.

On Wednesday, Fletcher – who previously served as cities and urban infrastructure minister – weighed into the controversy about the purchase of the so-called Leppington Triangle from a Liberal donor, explaining the decision was made by a departmental secretary due to a “highly inadequate brief” that disguised its true value.

Fletcher and his successor Alan Tudge have denied ministerial involvement in the sale, but Labor has warned it will pursue a further inquiry in parliament’s audit committee.

In a scathing report published on Monday, the auditor general found the price of land to build a second runway after 2050 was inflated by $26.7m above its fair value by a decision to include the land’s “speculative industrial rezoning potential”.

Related: Labor to push for inquiry into 'shocking' Western Sydney airport land deal

The report said that unnamed departmental officials acted unethically by failing to advise decision-makers on the basis of the land valuation and for not providing accurate answers when it investigated the sale.

Departmental briefings to the deputy secretary described the price as “reasonable”. Although the cost of up to $31.78m was outlined, briefings did not explain why the commonwealth had agreed to pay at least $30m to Leppington Pastoral Company, 22 times higher than the New South Wales government’s share.

On 31 July 2018, Fletcher was advised the land was valued at $30m, but kept in the dark about the discrepancy in cost between the commonwealth and NSW share.

In an outing at the National Press Club to announce a $3.5bn upgrade to the national broadband network, Fletcher said the decision to approve the sale was made by a deputy secretary, not himself as minister.

“The auditor general makes it plain that in his assessment – and I wouldn’t disagree with that assessment – information that should’ve been provided to the decision-maker was not provided,” the communications minister said.

Fletcher noted the “report uses the language ‘unethical’” and said he understood that referred to “key pieces of information that were not disclosed”. The minister endorsed the conclusion, stating: “I’ve absolutely learned things I did not know before.”

Fletcher said briefing material to the deputy secretary and himself was “deficient”, because it failed to disclose “key pieces of information” that would have allowed them to assess whether what was paid was reasonable.

Fletcher blamed “junior or mid-level officials” for the “highly inadequate brief”.

The auditor general recommended the department conduct more rigorous cost-benefit analysis and introduce new procedures governing valuations including taking minutes of discussions with landowners. The department agreed.

The department only obtained one valuation and negotiations with the landowner occurred in coffee shops with only one official present and no minutes kept.

Asked about these details, Fletcher replied “the auditor general is right to have made the recommendations he has” and welcomed that the department had agreed.

Fletcher said he was “not in a position” to answer a “hypothetical” about whether he would have allowed the sale if he were in possession of the full facts, but agreed full information would have raised “significant questions”.

The shadow infrastructure minister, Catherine King, said it was “almost unbelievable that minister Fletcher would fail to ask questions” after receiving such an inadequate brief, labelling it “ministerial incompetence”.

Related: Government paid 10 times too much for land at Western Sydney airport to be used after 2050

“Either the minister didn’t read his brief, he read it and failed to spot the problem, or he read it and didn’t care,” King said in a statement.

Leppington Pastoral 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.

Labor’s deputy chair of the audit committee, Julian Hill, and crossbench senator Rex Patrick, have called for an inquiry into the sale.

The infrastructure department has said an independent investigator is examining the role of departmental officials and a review of the transaction will also be conducted.