‘Gems that belong to the national estate’: Keating’s attack on Defence land sale

Former prime minister Paul Keating has launched a blistering attack on federal Labor’s plans to sell off historic military sites, as it emerged that NSW’s property developer had made an unsolicited bid for three defence sites, including Sydney’s Victoria Barracks, only to be knocked back.

State developer Landcom made the bid in 2023 as it searched for real estate opportunities for much-needed housing in NSW, proposing the redevelopment of the Randwick and Victoria barracks sites and HMAS Penguin at Mosman. The Department of Defence rejected the bid.

After a sweeping audit, Defence now plans to divest 13 NSW sites, including the barracks on Oxford Street, part of HMAS Penguin on Middle Head at Balmoral and Spectacle Island near Drummoyne, sparking fears that significant public land could be lost to private interests.

A growing alliance of Labor MPs, Liberals, Greens and independents is opposed to the sale of the Paddington barracks as controversy intensifies over the planned sell-off of prime heritage and waterfront defence property in Sydney.

Keating, the latest to publicly condemn the sale of military sites, said the Department of Defence had no right to sell such significant public assets.

“Some of these properties are gems belonging to the national estate, such as Victoria Barracks in Paddington, Spectacle Island and the naval barracks at Middle Head,” Keating said.

“Defence holds them, not as operating assets – they have long fallen out of military use – but holds them in virtual trust on behalf of the nation. That is, in an operational sense, they don’t belong to Defence to do anything with, including their sale.”

Keating said it was “exceptionally disappointing” that developers were making bids for “the whole of the Defence lands portfolio of properties put up for sale and redevelopment by the federal government”.

Earlier this month, The Australian Financial Review revealed a private equity company had approached the federal government with a $5 billion offer to buy the entire portfolio, which ranges from prime development land and disused barracks to golf courses and a vacant island in Sydney Harbour.

The portfolio was originally expected to raise $3 billion, or $1.8 billion after costs such as site remediation were factored in. The funds would be reinvested into strategic priorities, the government has said.

‘If the government wants to underwrite its commitment to AUKUS and the submarines, the government should provide the budgetary space to accommodate it.’

Paul Keating, former prime minister

Keating said the federal government should walk away from any sale plans.

“Former military assets of this quality and historic importance should be removed by the government from any sale program – Defence-sponsored or otherwise,” Keating said.

“This ploy by Defence is a current drum-up of what it has attempted to do in the past.

“In the mid-1990s, under pressure to fund portfolio savings, the Department of Defence offered the government I led, the option of cutting Point Piper-style waterfront blocks off slabs of Garden Island,” Keating said.

“It was another attack upon the national estate by Defence and one I rejected.”

Keating described the Defence Department as “an organisation characterised by trapeze-levels of incompetence, including its long specialisation in procurement overruns”.

“If the government wants to underwrite its commitment to AUKUS and the submarines, the government should provide the budgetary space to accommodate it and not leave it to Defence to vandalise the national estate on the way through,” he said.

Keating’s criticism comes after government sources, not authorised to speak to the media, confirmed that Landcom had undertaken analysis of Defence-owned sites in NSW for potential housing and that it had engaged with Defence on options during the land audit.

Landcom gave a proposal to Defence in 2023 for the development of the Randwick and Victoria barracks sites and the Mosman (HMAS Penguin) site.

No agreement was reached, and Landcom’s last correspondence with Defence was December 15, 2023, sources with knowledge of the proposal confirmed.

The bid was done without the knowledge of Housing Minister Rose Jackson or the Minns government more broadly. Despite engaging with Defence during its audit, Landcom is not in negotiations with the federal government on any sites at present, the sources said.

The Department of Defence was contacted for comment.

Jackson has said the state government was a potential buyer of Victoria Barracks, and Planning Minister Paul Scully has confirmed he had asked “Homes NSW to investigate potential options for Victoria Barracks” while ruling out “aggressive” development.

The federal opposition has also criticised the divestment as a fire sale.

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