Labor probes Snowy Hydro gas plant land deal with Liberal party donor

Federal officials from the Department of Industry, Science, Energy and Resources have deflected questions at a Senate estimates hearing about the purchase from Liberal party donor and property developer Jeff McCloy of land earmarked for a new gas fired generator expected to be built by Snowy Hydro.

Snowy Hydro is proposing to build a gas fired generator of up to 750MW in Kurri Kurri, in the New South Wales Hunter region, at a site owned by McCloy’s property development company, the McCloy Group, which took over the redevelopment of the site of the former Kurri Kurri aluminium smelter last year.

It is understood the McCloy group has undertaken to subdivide the land of the former aluminium smelter, which could become host to the controversial gas generator being developed by Snowy Hydro.

As a property developer, McCloy is prohibited from making political donations under state electoral laws in New South Wales. But in a high profile political controversy, the NSW Independent Commission Against Corruption (ICAC) found that McCloy had knowingly made ‘covert’ donations of $10,000 to two Liberal party state MPs, Tim Owen and Andrew Cornwell, who were both subsequently forced to resign from parliament.

McCloy previously served as the Lord Mayor of Newcastle between 2012 and 2014, and while nominally an ‘independent’ political candidate, has been a significant political donor to the NSW Liberal party, despite the state government ban.

McCloy has described himself as a “walking ATM” for the NSW Liberal party, having made tens of thousands of dollars in cash contributions to the party and its MPs. McCloy’s partner in the Kurri Kurri redevelopment, John Stevens, is also a donor to the Liberal Party aligned fundraising body, the Free Enterprise Foundation.

McCloy subsequently resigned from his own position as Newcastle Lord Mayor, following the ongoing controversy of the ICAC investigation in 2014.

As the site of the former Kurri Kurri aluminium smelter is already host to substantial switchyard and grid connection infrastructure, the site has been earmarked as the ideal site for the proposed Snowy gas generator.

The Morrison government looks set to direct the government owned Snowy Hydro to construct a new $650 million gas fired generator at the Kurri Kurri site, despite numerous calls for the project to be abandoned as both unnecessary and unwanted.

Snowy Hydro’s proposed site plan for the Kurri Kurri gas generator. Source: Snowy Hydro.

Officials from the Department of Industry, Science, Energy and Resources deflected questions about McCloy’s ownership of the Kurri Kurri site when questioned about the arrangement in Senate estimates hearings on Monday by Labor senator Jenny McAllister.

“Is the department aware that the prospective owner of the site, Jeff McCloy of McCloy group, is a major Liberal party donor?,” McAllister queried.

“We are not aware of that, and that would be a matter for Snowy Hydro,” department secretary David Fredericks told the senate estimates hearing.

The department officials also said that they were not aware of McCloy’s history as a Liberal party donor.

“Is the department aware that Mr McCloy was found by NSW ICAC to have illegal donations to Liberal party politicians?” McAllister asked.

“We’re not aware of that,” Fredericks answered.

The minister representing the federal energy minister Angus Taylor in the senate, ACT senator Zed Seselja, also said he was not aware of McCloy’s involvement in the Kurri Kurri gas plant project.

When asked about the terms of the deal for the potential purchase of the land for the Kurri Kurri plant, Frederick said:

“That would, firstly, be a matter for Snowy Hydro. Secondly, potentially subject to cabinet-in-confidence and thirdly, potentially a matter of current commercial-in-confidence.”

Officials also said that measures undertaken to manage the perception of any conflict of interest arising from the sale of the Kurri Kurri site were also a matter for Snowy Hydro “under their probity regime”.

Fredericks suggested that federal energy and emissions reduction minister Angus Taylor had not sought advice from the department about the management of the conflict of interest.

In response to a query about the Kurri Kurri site, a spokesperson for Snowy Hydro said that the company had investigated a number of prospective locations, finding that the site of the former aluminimum smelter was ‘optimal’.

“Snowy Hydro is constantly looking at growth opportunities throughout the NEM and has acquired a number of development sites in NSW and Victoria, including sites in the Hunter Region north of Sydney at Colongra and in the Hunter Economic Zone.  Part of the Kurri Kurri smelter site was identified as an optimal site for a gas fired power plant based on a number of criteria,” the spokesperson said.

“In accordance with its Statement of Expectations, Snowy Hydro operates at arm’s length from the Commonwealth government as Shareholder.  Therefore all matters relating to the site selection, due diligence and negotiations were undertaken independently from the Commonwealth government.”

McCloy launched an unsuccessful High Court challenge against the donation restrictions that target property developers. The case resulted in the High Court affirming that the laws prohibiting donations from property developers were a justifiable limitation to the implied constitutional freedoms of political communication.

Questions have been raised around the need for the proposed Kurri Kurri gas generator, including by the chair of the Energy Security Board, Kerry Schott, who said last week that the gas plant proposal did not stack up and questioned whether it could deliver on reductions in electricity prices promised by the Morrison government.

This article was updated to include the response from Snowy Hydro.