Independent Wagga MP Joe McGirr sided with the Coalition to limit the referral of Premier Gladys Berejiklian to the corruption watchdog over claims around the Riverina Conservatorium of Music's $30 million in grants.
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The NSW upper house voted on Wednesday to refer Ms Berejiklian to the Independent Commission Against Corruption (ICAC) for her alleged "failure to declare a conflict of interest whilst taking part in the approval of funding...despite her close personal relationship" with former Wagga MP Daryl Maguire.
In the lower house, Dr McGirr voted for a Liberal MP's motion to disagree with the upper house, which was carried.
The referral will still go ahead but ICAC will not be obligated to provide a report in response.
Dr McGirr told Parliament on Wednesday that he would not support the referral after putting his own questions to the conservatorium's board and government officials about how the grants were awarded.
"The development is important for our community, which has worked hard and carefully to make sure it meets the required standards of probity," Dr McGirr said.
"It is therefore unfortunate that the tireless efforts of the board, the community and the staff have been besmirched and undermined by the political discussion on this issue."
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Dr McGirr said the conservatorium was an "outstanding facility in our region and urgently needs that new accommodation" and that community members were now concerned that they had done something wrong.
Back in March, Dr McGirr voted to refer Ms Berejiklian to ICAC over claims that Mr Maguire had obtained confidential and commercially valuable information about planned motorways in Sydney and Ivanhoe.
Labor and the Greens have targeted the Riverina Conservatorium of Music's grants in parliamentary inquiry and budget estimates hearings since ICAC last year revealed Ms Berejiklian's "close personal relationship" with Mr Maguire.
The Wagga institution had received $10 million to move from the old CSU South Campus site, off Hely Avenue, to a building on Simmons street.
During the 2018 byelection triggered by Mr Maguire's resignation from Parliament after a separate ICAC investigation, the NSW government announced a further $20 million to transform the Simmons Street building into a 300-person music hall and specialised early childhood music education centre.
Conservatorium board chairman Andrew Wallace has previously said the organisation "absolutely" had not done anything wrong and followed government processes in applying for the grants.
Labor was able to pass its ICAC referral motion in the upper house with the support of the Greens, One Nation and the Shooters, Fishers and Farmers Party.
Wagga-based Nationals MLC Wes Fang voted against the ICAC referral.
Lower house Murray MP Helen Dalton voted against the government motion to disagree, telling Parliament that granting Wagga's conservatorium more money than every other regional conservatoria combined "does not pass the pub test".
"We live in a state where an Indigenous child was once jailed for stealing hamburger buns," Ms Dalton said.
"To say we should not investigate the New South Wales Premier over a dubious $20 million investment is insulting."
Liberal Manly MP James Griffin accused the ICAC referral's supporters of "verbal diarrhoea" in the form of "conspiracies, politics and diatribe".
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