By ANNA USHER

The Federal Government has confirmed parts of HMAS Penguin at Balmoral will be sold, in a shock move set to ignite the biggest land-and-access debate Mosman has seen in decades.

The decision is part of a sweeping national Defence shake-up, with the government finally releasing its response to the 2023 Defence Estate Audit – accepting all 20 recommendations and backing a focused program of divestment aimed at offloading “vacant, decaying, underutilised” properties that it says are costing millions to maintain.

Deputy Prime Minister Richard Marles said the reforms are “significant and challenging” but the government is “clear-eyed and committed to seeing it through,” in the national interest.

Finance Minister Katy Gallagher said sites identified by the audit would be sold at market value, “with careful consideration of remediation, heritage and community impacts”.

Under the plan, 68 sites were identified for divestment in the audit. The Government has agreed to wholly divest 64 sites, partially divest three sites – including HMAS Penguin – and retain one site in full.

Why HMAS Penguin matters to Mosman – and what’s actually being sold

HMAS Penguin is a 16.64-hectare site on Middle Head Road, commissioned in 1942 and part of Navy Fleet Command.

The official factsheet states the base “will be partially divested to retain the critical capability,” with “exact portions to be finalised through the divestment process.”

That “critical capability” is spelt out: the site delivers Navy clearance diver training and an underwater medicine unit, alongside functions including underwater medicine, maritime geospatial training, a Weapons Training Simulations System, and live-in accommodation.

The factsheet also says personnel connected with the critical capability will be “retained onsite”.

What does “partial divestment” mean here?

Right now, it means this: the Commonwealth has publicly confirmed that some part of the HMAS Penguin landholding is slated for divestment, but has not yet published the final boundary lines for what will be sold and what will stay.

The Government says the Department of Finance will manage the new divestments “due to its experience in managing large-scale divestment programs,” including remediation, heritage and community impacts.

Heritage protections and why this will be closely watched locally

The government factsheet flags here is a Commonwealth Heritage Listing for the whole site, including multiple buildings.

It also notes that properties on the Commonwealth Heritage List have protections under the Biodiversity Conservation Act 1999 and that there is an obligation to protect the Commonwealth heritage value of a property as part of any sales process.