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Royal Commission Into Commercial Activities of Government Act 1992, to Inquire and Report Whether There Has Been —

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Royal Commission Into Commercial Activities of Government Act 1992, to Inquire and Report Whether There Has Been — CHAPTER 6 TERM OF REFERENCE 1.5.1 FREMANTLE ANCHORAGE DEVELOPMENT 6 CHAPTER 7 TERM OF REFERENCE 1.6 NORTHERN MINING CORPORATION 7 CHAPTER 8 TERM OF REFERENCE 1.11 THE BURSWOOD ISLAND CASINO 8 CHAPTER 9 TERM OF REFERENCE 1.8 MIDLAND ABATTOIR SITE 9 TABLE OF CONTENTS 9.1 The term of reference 2 9.2 Introduction 2 9.3 The Treloar Committee 4 9.4 The Meat Industry Working Group 6 9.5 The GHD Dwyer report 7 9.6 The Western Australian Development Corporation 15 9.7 The sale 18 9.8 Problems emerging after the sale 22 9.9 The conduct of the MIWG officers 24 9.10 The conduct of WADC officers 27 9.11 Search for an explanation 30 9.12 The role of the Minister 31 9.13 The price 34 9.14 The relationship between Mr Ellett and Mr Ryan 40 9.15 Mr Ellett's support for the electoral campaigns of Mr Hill and Mr Troy, 1988/89 42 9.16 Departmental files and records 48 9.17 Conclusion 49 9 - 1 9.1 The term of reference 9.1.1 The Commissioners are required by their Commission, as affected by the Royal Commission into Commercial Activities of Government Act 1992, to inquire and report whether there has been — (a) corruption; (b) illegal conduct; or (c) improper conduct, by any person or corporation in the affairs, investment decisions and business dealings of the Government of Western Australia or its agencies, instrumentalities and corporations in respect of the sale of the Midland Abattoir site in 1986 and further to report whether — (d) any matter should be referred to an appropriate authority with a view to the institution of criminal proceedings; or (e) changes in the law of the State, or in administrative or decision making procedures, are necessary or desirable in the public interest. 9.2 Introduction 9.2.1 Under this term of reference, the Commission is required to direct its inquiry to the circumstances surrounding the sale of the Midland Abattoir site in 1986. It has heard evidence from 40 witnesses over 19 days. Two hundred and seventeen documents were taken into evidence as exhibits. Witnesses were generally agreed on the essentials of what happened, if not always on the details. All material witnesses denied any serious wrongdoing, though a number expressed a desire to do things differently if they had their time over again. 9.2.2 The following abbreviations will be used throughout this chapter: "Baillieu Justin Seward" — Baillieu Justin Seward Pty Ltd 9 - 2 "DID" — Department of Industrial Development "GHD Dwyer" — GHD Dwyer Pty Ltd "ILDA" — Industrial Lands Development Authority "Justin Seward" — Justin Seward Pty Ltd "MIWG" — Meat Industry Working Group "Prestige Brick" — Pilsley Investments Pty Ltd "Policy Secretariat" — Policy Secretariat of the Department of Premier and Cabinet "Taylforth" — Taylforth and Associates Pty Ltd "Treloar" or "Treloar Committee" — Treloar Committee of Inquiry into the Meat Industry "WADC" — Western Australian Development Corporation "WAMC" or "the Meat Commission" — Western Australian Meat Commission. 9.2.3 Prior to 1986, the abattoir/saleyard site was designated a Lands Department reserve, number 23917. The reserve was created in 1954 for an abattoir and saleyard and was vested in the Midland Junction Abattoirs Board, later to be styled the Western Australian Meat Commission ("WAMC" or "the Meat Commission"). The plan of the site tendered in evidence, shows that the site is an irregular, triangular shaped parcel. It is bounded on the south and west by the Helena River, by the Westrail Workshops and Railway yards on the north and by an Army facility on the east. 9.2.4 The Midland Junction Abattoir was opened in 1910 and was substantially rebuilt in 1948. It was estimated, in a study undertaken for the Government in 1985 by consulting engineers GHD Dwyer, to which reference will be made below, that the Government's investment in the abattoir by 1975 was $12.7 9 - 3 million. At that time, however, it was operating well below its economic potential, for reasons which are not material to this inquiry. As a result, in 1979 the abattoir, on about 8.9 hectares, was placed on a "care and maintenance basis", at a cost of some $450,000 per annum, leaving the saleyard operating on about 20 hectares. A reference to "the saleyard" in this report includes a reference to the effluent ponds, wholly contained within the abattoir site itself, without which the saleyard could not operate. 9.2.5 The future of the abattoir site was the subject of no less than six inquiries between 1981 and 1985. The committees and consultants engaged were concerned, generally, to ascertain the most appropriate use for the site and to establish a value. The inquiries included the Flack inquiry in 1981 and an evaluation of the site prepared by Justin Seward Pty Ltd ("Justin Seward"). 9.2.6 The findings and recommendations of the most comprehensive exercise, the Treloar Committee of Inquiry into the Meat Industry in 1984 ("Treloar" or "Treloar Committee"), are directly material to the ultimate decision to sell the entire site and will be referred to, in some detail, below. 9.2.7 In 1981, the Government decided to close the abattoir permanently. Cabinet also decided, inter alia, to sell the plant and equipment by tender, and to call tenders for the sale or lease of the cold store complex. In August 1982, Cabinet approved, in principle, the transfer of the freehold of some of the land, including the abattoir/cold store complex, but excluding the saleyard, to the WAMC and the sale by tender of the same complex, either as a whole or by sections, whichever yielded the better return. At this time, August 1982, the O'Connor Government expressed an intention to leave the saleyard operating and intact, at least for the foreseeable future. The transfer approved in 1982 was not, in fact, carried out until after the sale of the abattoir site in 1986. 9.2.8 There is little doubt that the abattoir site presented a significant problem to the Government from approximately 1981. All material witnesses were agreed on that point. Although no steps were taken directly to promote a sale, anyone seeking a property of that size, approximately 8.9 hectares in an industrial location, could scarcely have avoided becoming aware of the availability of the site for purchase. The problem with the property, for disposal purposes, was the cost of demolishing the very substantial buildings if they could not be used by a purchaser. In 1982, an experienced firm of valuers, Justin Seward placed a value on the site of $500,000. 9 - 4 9.3 The Treloar Committee 9.3.1 The saleyard presented a quite different situation. Closure of the saleyard and disposal of the site were never seriously contemplated until the Treloar inquiry. On the contrary, in July 1983, an interdepartmental committee, chaired by an officer of the Department of Agriculture, reported its conclusions as follows: "Midland saleyards are important, accounting for about 45 per cent of the slaughter stock sold through saleyards in the agricultural areas of the State. The trend is towards more direct consignment to abattoirs and other forms of sale by description which will gradually reduce the importance of the Midland saleyards. This is a slow process and it is likely to be around 10 years before the viability of the Midland saleyards would be in question and result in their closure on economic grounds. Due to their current importance the Department of Agriculture would advise that the saleyards be retained at this stage with a review in five years time of their viability and importance to the livestock industry." 9.3.2 In a submission made to the Treloar inquiry, the Department of Agriculture advocated the replacement of livestock auction sales over a period of time with alternative methods of sale, leading to the eventual closure of the yard and subsequent disposal of the site. Those submissions were accepted in substance by the Treloar committee. The interim report, published in September 1984 and the final report, published in November 1984, contained conclusions and recommendations which would have led, after several years, to the orderly closure of the yard and disposal of the site. 9.3.3 It is clear to this Commission that at the heart of the problems which have given rise to this term of reference is the apparent failure of those who were charged with, or who assumed, responsibility for dealing with the Treloar report to take seriously the recommendations contained in that report about the future of the saleyard and to ensure that the Government considered those recommendations. The Treloar Committee, while recognising that retaining the saleyard in operation rendered more difficult the sale of the abattoir site, concluded and recommended, inter alia, as follows: 9 - 5 - the abattoir site should be severed from the saleyard complex and effluent ponds and transferred to a body such as the Industrial Lands Development Authority (ILDA) for immediate disposal; - Midland saleyard should continue in operation until 1 January 1989; - from 1 January 1989, the saleyard should be closed and the assets disposed of; - the date of closure should be widely publicised from the earliest opportunity, to allow time for appropriate adjustment. 9.3.4 To understand how that failure arose, it is necessary to examine the role and operation of the Meat Industry Working Group ("MIWG"). 9.4 The Meat Industry Working Group 9.4.1 The nature and operation of the MIWG is central to this inquiry. Members of the group over the material time were Mr Ian Johnston and Mr Quentin Harrington from the Policy Secretariat of the Department of Premier and Cabinet ("Policy Secretariat"), Mr Alex Payne from the meat industry union and Mr Brian Gabbedy, the Assistant Director, Animal Industries, Department of Agriculture.
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