New South Wales coal scam damages Labor's standing ahead of polls

SYDNEY (AFP) - Corruption in the ranks of Australia's Labor party centred on a dodgy coal-mining deal cost New South Wales state A$90 million (S$92 million), a top official said on Thursday.

NSW Treasurer Mike Baird said he had asked the Treasury and the mining department to look into the cost of the Mount Penny scam, over which criminal charges were recommended last month against two high-profile state Labor figures.

Former party kingpin Eddie Obeid and ex-resources minister Ian Macdonald were last month found to have acted corruptly in the 2008 deal, following the largest-ever investigation by the state's Independent Commission Against Corruption (ICAC).

Mr Obeid is accused of conspiring with Mr Macdonald to rig a 2008 tender for a lucrative coal licence over land at Mount Penny, which he and his family secretly purchased in 2007-2008 and which soared in value once the licence was in place.

Both men have been expelled from Labor but have denied wrongdoing.

Mr Baird, from the ruling Liberal party, said he was "appalled" by the scam's cost to NSW, Australia's most populous state of which Sydney is the capital.

"I sort of sit here and shake my head," Mr Baird told NSW parliament.

"If the licences were not issued corruptly or negligently this state would be $90 million better off.

"Those resources, our resources, the state's resources, were effectively given away," he added, noting that these were conservative estimates.

The scandal has damaged Labor's standing in NSW ahead of September's national elections, with two federal lawmakers called to give evidence and another two named in proceedings.

Conservative leader Tony Abbott, on track for a narrow victory on September 7 according to opinion polls, said ICAC had "exposed the rottenness at the heart of the Labor party nationally".

Prime Minister Kevin Rudd has ordered a takeover of NSW Labor by the national executive to reform the scandal-hit branch, banning property developers from standing as candidates and pushing for greater control by rank and file members.