Albanese Government Prepares to Sell Prime Defence Real Estate, Sparking Criticism

Land once described by Prime Minister Anthony Albanese as belonging "to the whole nation" is now at risk of leaving public ownership as his government prepares to sell off prime Defence Department real estate around the country.

"That would, I think, be a very retrograde step because, if we get it wrong once, it disappears forever," the PM said in a 2021 parliamentary speech.

In opposition, Mr Albanese described Sydney Harbour as "a jewel for the entire country", warning of the privatisation of its "beautiful assets", including active and former naval sites.

Now some of that land will soon go on the market as part of the government's plan to sell dozens of military sites in a move criticised by Independent MP Zali Steggall as "a direct contradiction" of Mr Albanese's statements.

HMAS Penguin is among the most high-profile and contentious sites listed for divestment as the Australian Defence Force (ADF) tries to claw back funds to fill critical capability gaps and redirect investment for infrastructure supporting the AUKUS program.

The 16-hectare site on Middle Head in Sydney Harbour is still an operational naval base containing heritage-listed buildings and six hectares of pristine Sydney red gum forest.

Since Defence Minister Richard Marles announced the divestment plan in February, support has been growing for HMAS Penguin to be protected from developers before it becomes another "millionaire's row".

Veterans, housing, heritage and community organisations have been packing into Save HMAS Penguin public meetings in recent weeks.

And local MPs and councils have voiced concerns that, once lost, the land "cannot realistically be recovered".

It appears Mr Albanese shared those concerns not long ago.

Comments a 'contradiction'

In a 2021 parliamentary speech, Mr Albanese warned against governments selling land surrounding Sydney Harbour.

"When you travel overseas and you look at what has happened around foreshores … it is hard to think of a comparison whereby the Australian egalitarian spirit is reflected by the fact that so many Australians have access to the land around Sydney Harbour," he told parliament.

"There are attempts from time to time to undermine that … to essentially have Sydney Harbour and its beautiful assets … for sale.

In the same speech, Mr Albanese specifically referenced previous attempts to privatise harbour assets, including Cockatoo Island, and "critical assets" at Middle Head, where HMAS Penguin is.

He also quoted the late Tom Uren, a former Labor deputy leader and mentor to Mr Albanese, who argued the harbour foreshore "belongs to the nation".

Mr Albanese made similar comments in 2000, arguing the Sydney Harbour Federation Trust Bill should be "revisited down the track" because the deal allowed "the federation trust lands to be sold out to private interests".

"Anyone in my electorate can catch public transport across the harbour and go for that magnificent walk, which starts at Bradleys Head.

"It is a great opportunity and everyone walking along there, whether you are a millionaire or a pensioner, gets the same view. That is why issues of public space are very important and cannot be compromised."

HMAS Penguin is in Ms Steggall's electorate.

She has been among the most vocal critics of the sale, calling for the site to be preserved for future generations, "not carved up and sold off to the highest bidder".

Ms Steggall is accusing Mr Albanese of abandoning his public opposition to the privatisation of Sydney Harbour foreshore land.

"This is not just a local planning dispute — it is a direct contradiction of positions the Prime Minister has argued consistently for more than two decades," she said.

"The Prime Minister himself warned that once these lands are lost, they are lost forever. So what has changed?"

The ABC asked the Prime Minister's office about his earlier calls to protect the land.

"The independent Defence Estate Audit identified properties that had become too costly to maintain, with many sites underused, vacant, unsafe or unserviceable, with no direct contribution to ADF capabilities," a government spokesperson said.

"As the government has made clear, heritage protections will continue to apply and community consultation will inform transition planning and future use considerations."

Defence says public access a priority

Defence has decided to sell 67 military sites after an independent audit found they had little strategic value.

It is estimated the portfolio, which includes other prime real estate such as the Victoria Barracks in Brisbane, Sydney and Melbourne, could generate an estimated $3 billion for the ADF.

At a Save HMAS Penguin public meeting in Sydney last month, Heritage Protection Group's Jill L'Estrange warned the government's plan to sell most of the site at market value could lead to "inappropriate" luxury development.

"In a location like this, a sale aimed at maximum return will almost certainly guarantee luxury housing or high-rise accommodation," she said.

Mosman Council has also flagged the site contains significant environmental assets, "providing important habitat, biodiversity and landscape value".

"It also forms part of the nationally recognised Spit to Manly walking route, one of Sydney’s most valued coastal experiences, underscoring its importance for conservation, recreation and public access," the council said in a senate submission.

The Defence Department said the government was committed to preserving and enhancing public access to the "historically significant sites" being divested.

Assistant Defence Minister Peter Khalil has spoken at community events, explaining that divestment did not automatically mean a private commercial sale.

Almost 200 submissions have been made to a Senate inquiry into the management of Defence estate assets.

Among them, Retired Brigadier Kevin O’Brien, who was a Trustee of the Sydney Harbour Federation Trust for 11 years, pointed to lessons from the last major Defence divestment program.

He said some sites remained vacant for decades after they were sold and needed "constant expensive maintenance".

"Based on my experience as a Trustee, the most efficient way to manage heritage properties is for Defence to retain and use the property for community-facing activities," he said in his submission.

He said consideration should be given to transferring Sydney heritage assets to the Trust if they were not retained.

Defence Minister Richard Marles said the properties being divested would be transferred to the Department of Finance "relatively quickly over a period of the next couple of years".

But he added consultation with community groups and local members would be ongoing "to make sure that as we manage the future of HMAS Penguin, be it inside Defence or beyond, it is a future which has the best outcome for the community".