Chapter 3 Proposed development and construction of housing for Defence at
Defence Housing Australia (DHA) seeks approval to construct 209
dwellings at a single site in Ermington, Sydney, NSW. The dwellings are a mix
of three and four bedroom homes and will be occupied by Department of Defence
The purpose of the project is to reduce the proportion of Defence
personnel and their families residing in private rental accommodation in the
This proposed development and construction project was referred to the
Committee on 24 November 2011.
Conduct of the inquiry
Following referral, the inquiry was advertised nationally and
submissions sought from those with a direct interest in the proposed project.
The Committee received three submissions to the inquiry and three
supplementary submissions, including two confidential submissions detailing the
project costs. A list of submissions can be found at Appendix A.
The Committee undertook a site inspection and held a public hearing and an
in-camera hearing on the project costs on 5 March 2012 in Sydney.
The transcript of the public hearing and a copy of the submissions to
this inquiry are available on the Committee’s website.
Need for the works
In evidence provided to the Committee, DHA stated that this project was
necessary to help address the current shortfall between DHA’s Sydney housing
portfolio and Defence requirements:
Currently there are in the order of 600-plus families with
dependants who require a housing solution to be provided in this area. That has
developed over a number of years because of the needs of Defence, which
primarily requires a backyard size of 25 square metres or greater. In the
Sydney area it is difficult to find land and houses that meet their needs.
Consequently, most of the families tend to go more to the outer-30-kilometres
ring from the Defence bases. This development is for us a great opportunity to
provide housing in much closer that meets those needs.
In their submission to the inquiry, DHA further noted that as the
proposed works will reduce the number of Defence personnel in private
accommodation, this in turn will decrease the costs of Defence’s Rent Allowance
(RA) housing subsidy:
The proportion of families on RA is 35.6 percent,
significantly higher than the Defence and DHA target of 15 percent … An
additional 209 dwellings at AE2 Ermington will contribute significantly to the
reduction of the RA level in Sydney to below 25 percent by 2015/16.
In addition to the direct savings to the defence bill by having fewer
families on RA, DHA also highlighted some additional costs that can be avoided
by having fewer families searching for private rental accommodation:
When people are on RA it is not just the dollar value of the
rent. When they are posted into a locality they then need to go and search for
a house. That can take quite a considerable amount of time, where they are not
being usefully employed. Also, they are in hotel accommodation of some sort, so
you have the extra cost of hotel accommodation while they are trying to find
somewhere. And, of course, while they are trying to find somewhere they are
also trying to get their children into school. So they may put their children
into a school but find accommodation that is in a totally separate area. Then
they have to remove the children or they have the issue of trying to take the
children to school in time. So there are a lot of added costs that are not in
the rental figure.
The Committee is satisfied that there is a need for the proposed works.
Scope of the works
The proposed scope of the works is detailed in Submission 1: Defence
DHA indicated in their submission that large-scale construction on the
Ermington site was the preferred option for addressing the current Defence
housing shortage in Sydney:
The acquisition of ‘broadacre’ sites followed by development
and construction is DHA’s preferred delivery method because of the economies of
scale associated with bulk procurement of new constructions and the surety of
supply that accompanies large development pipelines. This delivery method is
even more attractive when well-located Defence land is available, such as in
The DHA proposal envisages development of road and civil infrastructure
at the site followed by construction of 209 dwellings. DHA advises that construction
will take place in four stages over a period of three years as follows:
n Civil infrastructure;
n 123 three and four
n 53 three and four
bedroom courtyard style homes;
n 21 three and four
bedroom detached homes; and
n 12 three and four
bedroom ‘4 pack’ homes.
In addition to the proposed works, DHA stated that whilst the project is
underway further parallel works will also be conducted on nine ‘super lots’
located on the Ermington site:
The nine super lots will be developed to accommodate the
construction of 228 apartments. These super lots will be sold to developers to
build apartments and, depending on further housing requirements for Defence, up
to 30 percent of the resulting apartments may be utilised by DHA.
Whether DHA chooses to utilise the apartments being built on the
Ermington site will depend in part on the outcomes of a trial program, which
will test the feasibility of offering defence personnel apartment style
We have engaged with Defence now on a trial program over the
next couple of years to look at the introduction of town houses with smaller
backyards and also reasonably sized apartments. That trial will last over the
next two to three years … If the trial determines that certain sized apartments
in certain locations will meet the Defence need for housing in the Sydney area,
then we will look to see whether we can take some of these apartments and
include those in our DHA housing stock.
Subject to Parliamentary approval of the project, construction is
planned to commence on the project by July 2012 and completion would be
expected by December 2014. DHA will also encourage
the private developers who will develop the apartment blocks to also be
completed by the end of 2014.
The Committee finds that the proposed scope of works is suitable to meet
Cost of the works
The estimated cost of the project is $90.6 million including GST but
excluding the cost of land.
DHA expects these costs to be recovered through the sale of individual
super lots to developers, and the sale of DHA constructed housing through its
sale and lease-back program. DHA described the sale
and lease-back program to the Committee as follows:
The sale and lease-back program is the main program that DHA
uses to raise revenue. This underpins the development and construction of the housing
business of DHA … We build the product, we sell it to an investor, we then
lease it back from the investor and sublet it to defence people. That lease
from the investor could be anywhere between nine and 12 years.
The Committee is satisfied that the costings for the project provided to
it have been adequately assessed by the proponent agency.
Prior Inquiry into the Ermington site and the Ermington Master Plan
In 2001, Defence made a referral to the Committee seeking to carry out
works relating to site filling, stabilisation and construction of
infrastructure at the same location as the current proposed works. The
Committee tabled its report on 25 May 2001, recommending that it was expedient
for Defence to carry out the works.
As part of the process for gaining development consent for the site,
Defence prepared the Ermington Master Plan. This master plan was developed
through consultation with a local community group, the Ermington Residents’
Committee, and other local organisations, before being ultimately approved and
adopted by the NSW Planning Department in 2002.
The Ermington Master Plan provides for between 550 to 700 dwellings to
be constructed on the site and dictates development specifications relating to
parklands and infrastructure.
The DHA submission indicates the total number of dwellings on the
Ermington site will be approximately 563, taking into account the DHA proposed
works, development of the super lots and the portion of the site already
constructed by private developers.
In its submission to the inquiry, the Ermington Resident’s Committee provided
support for DHA’s proposed number of dwellings:
It is acknowledged that the earlier Defence planning for the
site and the existing development consent have been based on the 700 maximum;
this will mean the DHA proposal will have a lesser impact than anticipated in
the existing consent which of course is positive for the community.
Having regard to the evidence put before it concerning the design of
DHA’s proposed works, the Committee agrees that development of the Ermington
site will be in harmony with the 2002 Ermington Master Plan.
Local engagement and community consultation
In evidence given to the Committee, Mr Howman described DHA’s stance regarding
the local community’s input to this project:
We think it is very important to hear what they have to say
and incorporate their findings because, at the end of the day, we are building
a community here at AE2 Ermington. I say that because, unlike most developers,
who will build a development and then move on, we will build this development,
build the houses, allocate those houses to defence members and maintain those
houses. We will be here for decades, so it is very important that whatever we
leave behind is usable and fits the community needs, not only for the defence
people but for the local community.
Ms Heather Nesbitt, a consultant hired by DHA as the social and cultural
planner for this project, further elaborated on the specific engagement
activities that had taken place:
Two newsletters went out late last year in October and
November. We had a community information day on the site in December, with
about 80 people attending that, with information displayed for them to
understand what was then happening. We have been actively engaged with the
local residents committee and have been keeping them informed all the way along
the process, and we have also engaged with various service providers in the
area: the Parramatta City Council, the police, the Department of Community
Services and those types of agencies. So it has been an active consultation
process to let people know what is happening in their community.
There were three potential significant impacts on local residents
identified through the community consultation relating to construction traffic,
dust and noise. Mr Nigel Macdonald, Director of National Project Consultants
Pty Ltd, addressed these impacts in evidence to the Committee:
The proposal for the DHA works is to ensure in dealing with
traffic that all traffic comes in and out of Silverwater Road and does not go
through residential streets. Regarding noise, DHA's construction process will
be within the allotted time stipulated within the development consent, so there
will be no work outside of those working hours that are stipulated in the
consent. In terms of dust, there will be dust mitigation measures along the
boundaries which are typically to do with spraying the ground when there are
civil works in operation.
The Committee also heard from Mr Ken Newman, Chairman of the Ermington
Residents’ Committee, who praised the consultation that had taken place regarding
the Ermington site. Mr Newman advocated a similar collaborative approach
between developers and local communities in future developments:
From our approach to the development we have achieved a great
deal of benefit for our community … Our approach of working in partnership with
Defence resulted in similar Defence projects and their organisers contacting us
to ask why we have been so successful where they have not. These groups were
surprised and made some changes to their attitude from being watchdog
committees or anti-development groups to our style.
The Committee is impressed with the collaborative consultation that has
been undertaken to date on the AE2 Ermington project, and trusts that the
productive relationship between DHA and the Ermington Residents’ Committee will
continue over the life of the project.
Further, the Committee commends DHA for the engagement of a social and
cultural planner to assist with the community consultation process for the
Ermington development. The Committee made a recommendation to DHA in a previous
inquiry regarding the engagement of social and cultural planners,
and it is pleasing that DHA now formally incorporates this work into their
Naming of the site
DHA advised that following construction of the proposed works, the estate
is to be known as ‘AE2 Ermington’. AE2 was the name of the
first Allied and Australian submarine to enter the Dardanelles strait in 1915
as part of the Gallipoli campaign. DHA intends to name the site at Ermington
AE2 to reflect the site’s role as a naval depot in World War II.
The Committee received a written submission from Rear Admiral Peter Briggs,
Chairman of the AE2 Commemorative Foundation, which provided strong support for
the project name. Rear Admiral Briggs noted that:
Whilst the deeds of the Australian soldiers who forged the legend
of ANZAC at Gallipoli, are embedded in the national consciousness, it is ironic
that the heroism of the Australian sailors who also fought in the same campaign
is largely unrecognised. The nomination of AE2 to the DHA project at Ermington
will help to redress this unfortunate situation.
The Committee supports the use of the name ‘AE2’ for the housing project
and encourages DHA to explore possibilities for erecting plaques, monuments or
similar structures on the Ermington site to further communicate the history of
Final Committee comment
The Committee was satisfied with the evidence provided by DHA regarding
the proposed development and construction of housing for Defence at Ermington,
The Committee was particularly impressed by the social planning and
community consultation undertaken by DHA in relation to this project, and notes
the significant input provided by the Ermington Residents’ Committee and other
Having regard to its role and responsibilities contained in the Public
Works Committee Act 1969, the Committee is of the view that this project
signifies value for money for the Commonwealth and constitutes a project which
is fit-for-purpose, having regard to the established need.
||The Committee recommends that the House of Representatives
resolve, pursuant to Section 18(7) of the Public Works Committee Act 1969,
that it is expedient to carry out the following proposed work: Proposed development
and construction of housing for Defence at Ermington, Sydney.
Ms Janelle Saffin MP
19 March 2012