Lendlease juggernaut lacks social licence

By Wendy Bacon

Just a week before Christmas, the social media team at corporate giant Lendlease tweeted a prediction for 2019 from its CEO Steve McCann.

“It’s now well understood that while government’s grant permits, communities are the ones that grant permissions. This means if we don’t have a social license to operate, our projects don’t progress. Given the size and scale of urban generation projects we deliver around the world, it’s imperative that we form a genuine partnership with our community and stakeholders.”

As McCann clearly recognises, a social licence involves gaining approval within the local community and other stakeholders. His statement was part of a CEO survey in the Australian Financial Review. Just ten days earlier, the Gladys Berejiklian government announced that it had awarded a $730 million contract to Lendlease to demolish and rebuild the Allianz Football stadium at Moore Park.

If this was a genuine statement by McCann of Lendlease’s corporate intent, thousands of local residents living near the stadium, local Councils and local MPs, community groups and others who oppose the stadium could breathe a huge sigh of relief. This is not to mention the millions of citizens who have indicated in polls or petitions that they opposed the stadium tear down.

But of course, it’s just some more slick PR from Lendlease, which is known for its clever corporate communication strategies. In fact, rather than Lendlease’s $730 million contract having a social license, it was produced through what would better be described as a classic NSW political fix.

With Labor opposition leader Michael Daley promising that the publicly funded rebuild will not go ahead if Labor wins the March election, it must be amply clear to Lendlease that while it may have a contract, it doesn’t even have a political license, let alone a social one.

The key decision in the fix was made at a Cabinet meeting in November 2017, after which Premier Gladys Berejiklian announced that the knockdown and rebuild of Allianz stadium would begin in 2019. This flew in the face of earlier plans and some Ministers were reported to be opposed. Berejiklian was so confident that she knew what the value of the contract would be – $700 million – although there was no business case, let alone design for the project.

Determined to get the project underway as fast as possible, Berejiklian then tasked Infrastructure NSW (INSW) to come up with a business case. Oddly, this job seems to have come out of the blue for INSW because there was no mention of the project in the 2016-2017 Annual Report or its project pipeline. Nevertheless by the end of February 2018, INSW managed to get together a business case in support of the project.

INSW appointed KPMG as its consultants to work on the business case, which remained secret until the NSW Upper House unearthed it. A NSW Parliamentary Inquiry found that although there were good reasons to redevelop the stadium, the business case did not show a positive cost/benefit ratio and had not met the government’s own infrastructure spending criteria. By proceeding with the project, the government had undermined public confidence in it.

KPMG has an extraordinarily long-term association with Lendlease as its auditor for 60 years. Anne Terry, one of its senior partners responsible for infrastructure deals, was previously a senior manager at Lendlease. According to her Linked In profile, she helped manage key bids including the successful one for Packer’s controversial high-roller Crown Casino project at Barangaroo while she was working at Lendlease.

The ten-person INSW Board, which is appointed by the Premier, includes five senior business figures with strong past and present corporate connections and top public servants including the Secretary of the Department of Planning and Environment Carolyn McNally and the Secretary of NSW Treasury, former banker, Michael Pratt. The corporate board members include Alise Tansey, who notes on the Board’s register of interests that she is a board member of Lendlease Investment Management, a subsidiary of Lendlease Corporation.

In response to questions from City Hub about how INSW manages conflicts of interest, a spokesperson stated that the Board is “advisory and not decision making”, …it is the “CEO who takes decisions, manages and controls” INSW activities subject to the “control and direction of the Premier”. NSW Board members make full disclosures. “There is no business relationship between Lend Lease Investment Management, on which Arlene Tansey is a non-executive board member, and Lend Lease Building, which is contracted to construct the SFS.”

While the business case was being prepared, INSW also became the project’s ‘proponent’ or applicant. On April 4, it wrote to Planning NSW Secretary Ms McNally requesting the Secretary’s Environmental Assessment Requirements (known as SEARs), which are needed before the EIS process can begin. In another sign of the rush to get the project underway, it was not until a week later, on April 12, that the INSW became responsible for the delivery of the project when the Premier signed a project authorisation order as required by the Infrastructure NSW Act. In less than a month, the SEARS were published.

On June 12, without any approval or community consultation of any kind, Infrastructure NSW then sought expressions of interest to knock down and build the stadium. There was a ten-day deadline for the expressions of interest. Lendlease and another construction company Multiplex were shortlisted.

While INSW was the agency responsible, the contact for the expressions of interest was an employee from E3 Advisory, which is a large services company, that has earned millions for being an ‘interface’ between RMS and Sydney Motorway Corporation for WestConnex.

While the contract was for the whole project, INSW used the same approvals tactic that the Sydney Motorway Corporation has used for WestConnex by staging its application. This means that a huge number of important decisions have been postponed until further investigations can be done.

The community and Councils have posted hundreds of serious submissions objecting to the project, all of which are duly considered and batted away by Planning’s decisionmakers. It’s a charade.

Two senior Planning department bureaucrats, rather than Ms McNally, forwarded the final recommendation to the Planning Minister Anthony Roberts on December 4th, He approved it on December 6th. The ‘notice of decision’ states all the matters he took into account including “community objections”. The Lendlease contract was announced the following day. The cosy circle was closed.

So far, Lendlease has made no announcement of the contract on either its website or to their investors on the stock exchange. INSW has 45 days to publish the contract but Lendlease has confirmed that it will be at the site early this year. Temporary walls have gone up and the ‘soft strip’ is underway but before Lendlease can begin to demolish the structure, there are construction plans and documents that must be prepared. Some will be routine but INSW is also required to set up a Community Consultative Committee. Today the INSW announced that anybody wanting to apply to be on this Committee must meet the tight deadline of January 16th. Such haste only serves to underscore community cynicism. (See note below).

While the rush to force this project on the community continues, the contract that INSW has signed with Lendlease allows it to be compensated only for what it has spent if Labor wins the March state election and the project is cancelled. Surely, with the election in the balance, it’s in the public interest to spend as little of the taxpayers’ money as possible? One suspects that there would be more ‘social licence’ for Labor, Greens and Independents’ preference to halt demolition, rather than the Premier’s determination to proceed at breakneck pace. While Sydney Cricket Ground Trust Chair Tony Shepherd may have got his way, many would agree with commentator Peter Fitzsimons that investment in community sporting infrastructure would be a better use of scarce public dollars.

McCann’s promotion of his concern for ‘social licence” serves to remind us of other projects with which his company is ploughing ahead in the face of social opposition, including the threat to koala habitat at the enormous yet-to-be-developed new neighbourhood at Gilead on the far south-western outskirts of Sydney; Packer’s massive high roller Crown casino that’s pushing even higher than Lendlease’s other bulky Barangaroo towers; the NorthConnex tollway, a project on which Lendlease is now behind and losing money; and WestConnex Stage 3, for which it took on a contract without a detailed design that involves building a tunnel just a few metres below people’s homes. Even the NSW EPA argued that Stage 3 WestConnex project shouldn’t be approved by NSW Planning without more investigation into its impacts.

It might also focus the public’s mind on other questionable, although not illegal, practices such as paying little or no corporate tax in Australia. In December, independent investigative journalist Michael West reported that Lendlease earned a total revenue of $89 billion over six years, declared profit before tax of $5.3 billion, paid distributions to owners of $2.1 billion but still paid no income tax in Australia. West also exposed how Lendlease was treating billions worth of deposits from retirees entering its retirement villages as a “large unsecured, interest-free loan to a property developer.”

There probably isn’t much of a ‘social licence’ for these practices either.

Note: After publication, the author has received information that some advertisement or notification of the deadline for the Community Consultative Committee (CCC) was made before Christmas. If so, one month over the holiday period is still a short period. More questions have been submitted on this issue and will be followed up in further stories.

Wendy Bacon was previously the Professor of Journalism at UTS. More stories can be found on her blog at wendybacon.com