Questions raised … the Valuer-General, Philip Western. Photo: Adam Hollingworth

A ”FORENSIC review” of land valuation contracts awarded over more than a decade will be conducted by the NSW Auditor-General amid increasing concern about the accuracy of a system that determines land tax bills and council rates.

The review follows questions about the integrity of the process that have emerged from a parliamentary committee inquiring into the office of the NSW Valuer-General, which issues about 2.4 million valuations a year.

In recent weeks it has been revealed that wealthy landowners are having their private and commercial property values reduced by billions of dollars for tax purposes after objecting to official decisions or taking legal action.

Concerns about the lack of accuracy in valuing land has led to scrutiny about whether land tax bills and council rates have been assessed correctly.

Questions have also been raised about the relationship between the Valuer-General, Philip Western, and a company he helped establish, Quotable Value Australia, which has been paid millions of dollars for valuation work during his tenure.

A parliamentary committee has asked the Auditor-General, Peter Achterstraat, to report back on every payment made by the government to private land valuation firms since 2000.

Mr Achterstraat will calculate how much has been paid to each of 20 valuation firms and check the figures with contract data.

The Herald revealed that official figures provided by Mr Western to the committee indicated that in the past five years Quotable Value Australia had received 60 per cent of payments to private contractors for valuation work for rating and taxing purposes.

Mr Western says the figures are incorrect. The director-general of the Department of Finance and Services, Michael Coutts-Trotter, has been asked to investigate.

The chairman of the parliamentary committee, the Hornsby MP Matt Kean, said Mr Achterstraat would conduct ”an independent and transparent inquiry so the committee is able to form an opinion based on the facts”. He is expected to report back within a month.

”As an accountant and an auditor, I believed the issues that have been identified are serious,” Mr Kean said.

Mr Western was questioned during a hearing of the committee last week about his relationship with Quotable Value Australia.

He told the committee he was general manager of rating and taxing at Quotable Value New Zealand, the company’s parent, owned by the New Zealand government, from 1999 until June 2003. He held the same position at the Australian arm after it was established in 2000 but has ”no business or personal interest” in the company.

Mr Western said he was a ”close friend” of one of the New Zealand company’s senior managers and had given a job to a woman who has become its chief operating officer and who he believes is also in charge of Australian operations.

When Mr Western was appointed Valuer-General in September 2003, the company held only one contract with the government – for land valuation work within the City of Sydney.

Mr Western said a tender evaluation committee decided he should not chair that year’s process due to his recent work at Quotable Value, which was a tenderer.

But he said the next year the panel decided he should chair the panel to oversee contracts to be awarded in 2004 because ”any perceived conflict would have disappeared at that stage”. This was particularly due to the presence of a probity officer overseeing the process.

Mr Western chaired the panel until 2007, after which responsibility was transferred to the land and property information division of the Lands Department.

He said he had demanded answers from the division about the figures provided to the committee.