A billionaire family has banked a few extra dollars after the Australian Government paid ten times the going rate for a piece of land located in the future Western Sydney Airport precinct. The value of the 12-hectare plot of land was just US$2.12 million, but the government ponied-up $21.22 million for it. That’s caused some unkind people to suggest the Australian Government is playing fast and loose with taxpayer’s money as Sydney’s second airport starts to take shape.
Australian Government pays ten times the going rate for land
The furore arose after the Australian National Audit Office cast their eye over the purchase of land in and around the Western Sydney Airport site. The Australian Government department responsible for signing the checks is the Department of Infrastructure, Transport, Regional Development, and Communications.
Western Sydney Airport is due to open in 2026. It has been a long time coming and should take some load off Sydney’s main, capacity-constrained airport. But the new airport, built mainly on farmland, is proving a bonanza for local landholders.
The Audit Office’s report found the Department of Infrastructure did not exercise appropriate due diligence when purchasing some land. Further, they did not develop an appropriate acquisition strategy. The audit found the valuation approach inflated the value of the land, which led to the Australian taxpayer paying more than was proper.
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Local billionaire family gets a helping hand
In the spotlight was a 12-hectare block of farmland bought by the Australian Government in 2018. They paid $21.22 million for the land or $18.9 million than it was worth. You might think this was a nice little earner for a hardscrabble cow cocky, and good luck to them. Not so. The billionaire Perich family owned the land.
The western Sydney based family have interests in shopping centers, land, and manufacturing. In 2019, an annual listing of cashed-up Aussies put the family’s wealth put at US$1.45 billion. That’s a tidy sum but hardly places them in the top tier of Australia’s billionaires. So it warms your heart to see the Australian Government is taking such good care of them.
While the revelation has some Australian Government ministers ducking and weaving, others aren’t so shy. The Minister for Infrastructure, Transport, Regional Development and Communications is Michael McCormack. He’s also Australia’s Deputy Prime Minister. He calls the land buy a bargain.
“I appreciate that yes, it was very much over the odds, I appreciate there’s a review going on into how that actually happened,” Mr McCormack told Sydney radio station 2GB on Monday.
“But eventually when there is a need for more runways and more infrastructure to be built at Western Sydney Airport, they’ll look back and say, probably: ‘What a bargain that was’.”
Western Sydney Airport might yet be an expensive white elephant
The Minister might be right. But the Perich land buy was for a proposed second runway, which is probably a good 40 years off. The Western Sydney Airport is getting built by the Australian Government and will cost between $4.25 billion and $5.66 billion.
In contrast, Simple Flying last week wrote about a private airport build one thousand kilometers north. The big runway at Toowoomba’s Wellcamp Airport, the terminal, cargo facilities, and associated infrastructure to bring it up to scratch cost less than $100 million.
Wellcamp was built by private money by a family, not unlike the Perichs. Unlike the Australian Government, they seem to appreciate the value of a dollar. Western Sydney Airport may or may not turn out to be a white elephant. But already, it’s proving a nice little earner for some people. As one Sydney-based government figure said last week;
“The number of billionaires that will get created will be embarrassing.”