Federal Labor is demanding the Morrison government “urgently explain” more than $30m in offsets it bought for the western Sydney airport, joining the Greens in calling for an investigation.
And the New South Wales opposition wants a wider inquiry into the management of the state’s environmental offsets scheme and tens of millions of dollars in offset credits purchased from properties linked to consultants whose company advised the government on development in western Sydney.
The NSW Greens have said they will also push for a parliamentary inquiry.
Guardian Australia revealed that an environmental consultant who holds interests in a property that made more than $40m selling conservation offsets to governments has interests in two other properties – Hampden Vale and Hardwicke – that have sold tens of millions of dollars more.
Steven House is a former director of Eco Logical Australia, a firm that advised governments on projects in western Sydney.
He is also a director of Meridolum No 1 – a company that made more than $40m selling offsets for infrastructure projects that Eco Logical, which employed two of Meridolum’s directors, provided offset advice on.
Over a two-and-a-half-year period, more than $100m in offsets were sold across all of the properties for projects including $37.5m for the western Sydney airport, $50.6m for new roads and $12.5m for suburb developments. The offsets were predominantly bought by the state and federal governments.
House and his Eco Logical Australia colleague, who is a director of Meridolum, have denied any suggestion of wrongdoing or conflict of interest, saying they made the appropriate declarations.
Federal Labor’s infrastructure spokeswoman, Catherine King, and the environment spokeswoman, Terri Butler, said the Morrison government should “urgently explain” the expenditure on the offset sites for the airport.
More than half of the $62.9m in credits bought by the infrastructure department as part of its offsets package for the airport were bought from the three properties.
“What due diligence processes did the Morrison government undertake in relation to the transactions, how did it manage conflicts of interest and why does there appear to be ‘windfall profits’ resulting from the deals?” they said.
The revelations follow the purchase by government of land in an area known as the Leppington triangle for the airport’s second runway. An auditor general’s review last year found the government paid $26.7m more for the land than it was worth.
Butler and King said there were also significant questions about the legitimacy of the government’s offset plan for the airport and its use of land it already owned that had been previously earmarked for conservation as the project’s main offset.
“Scandals like this are exactly why Labor formed a Senate inquiry into the planning, construction and management of the western Sydney airport project,” they said.
The federal Greens leader, Adam Bandt, said the Coalition should investigate the purchases made by the infrastructure department and what processes were followed.
“Public trust is paramount for major projects and the revelations published in the Guardian put a massive question mark over the environmental value of offsets for the western Sydney airport,” he said.
The party’s environment spokesperson, Sarah Hanson-Young, said she would raise the airport offsets in a committee hearing next week that is examining the government’s proposed changes to national environmental laws.
“I will pursue this scandal with the government officials,” she said. “The government must be held to account.”
The NSW opposition said it would seek a “root and branch inquiry” into the state’s environmental offsets scheme and the transactions.
NSW Labor’s planning spokesman and upper house leader, Adam Searle, said the amount of money involved – more than $100m – was “staggering” and an investigation was needed.
“This requires a full, open, root and branch inquiry to determine how this happened,” he said.
“The integrity and probity of the biodiversity offsets scheme is at stake and there is a dark cloud over its administration by government departments. There are two possible options: the auditor general or Icac (Independent Commission Against Corruption). Given the gravity of the situation, I think Icac should consider looking at the matter.”
The NSW Greens MP Cate Faehrmann said the offsets scheme was “broken” and called for Gladys Berejiklian’s government to step in.
She said she had referred matters raised in two reports by Guardian Australia to Icac and the state’s auditor general and would call for a parliamentary inquiry when parliament returned.
“It’s not good enough for the government to respond to these revelations by launching internal investigations, undertaken by the very departments that might be part of the problem,” Faehrmann said.
“The environment minister [Matt Kean] needs to step in and refer the entire scheme to the auditor general, including everything that has been revealed in the Guardian’s investigation.”
Eco Logical has been involved in the state’s offsetting scheme since its inception and for years was the main private provider of biodiversity impact assessments of developments, training in the state’s offset scheme and conservation value assessments for private landowners.
Since the 2000s it has advised the NSW government on major developments in western Sydney, including for new suburbs and for the western Sydney infrastructure plan, a joint state and federal government roads program to support the new airport and surrounds.
Tim Beshara, of the Wilderness Society, said: “At a minimum, the Commonwealth and NSW government need to appoint an independent panel to examine this. Biodiversity offsets are a terrible policy failure.”
“They’re used to justify the destruction of natural habitats that never should have been allowed to be disturbed,” Beshara said.
“They often lock in damage upfront but fail to ever deliver the promised improvements later. There are increasing questions about conflicts of interests and value for money.
“Australians deserve an official response from all the relevant ministers and departments about how they are investigating the issues raised in the Guardian’s reporting.”
Guardian Australia sought comment from the minister for infrastructure, Michael McCormack, who referred questions to the minister for urban infrastructure, Paul Fletcher. No response was received.
Guardian Australia also sought comment from Kean. His office said the NSW environment minister was travelling and unavailable for comment.
House and the directors of Meridolum did not provide further comment but have emphasised they followed government tender processes and made the appropriate declarations to all departments about House and his colleague’s roles at Eco Logical Australia.
They have also noted publicly available information about the anticipated demand for offsets in western Sydney, including through the environmental impact statement for the new airport.
House has also said that due to conflicts arising as a result of his interests in three biobank sites, he was excluded from negotiations of offset sales from the Meridolum and Hardwicke properties.
A spokesperson for the federal infrastructure department has previously said the department “conducts all tenders … in accordance with commonwealth procurement rules”.
As part of the offset procurement process in 2019, “vendors were required to declare conflicts of interest and that they had not otherwise engaged in any collusion, anti-competitive conduct or any other similar conduct in relation to the preparation of the tender”.
The owners of Meridolum, Hardwicke and Hampden Vale “made these declarations, and advised the department of the detail of any conflicts of interest”, the spokesperson said.
