2.1
Services Australia (the Agency) seeks approval from the Committee to proceed with the proposed fit-out of New Leased Premises at 205 North Quay, Brisbane, Queensland. The aim of the project is to consolidate the Agency’s nine current Brisbane sites (11 leases) into one fit for purpose office space by 2025 in accordance with the Whole of Government Leasing Strategy.
2.2
The estimated cost of the project is $89.36 million (excluding GST).
2.3
The project was referred to the Committee on 1 December 2021.
Conduct of the inquiry
2.4
Following referral, the inquiry was publicised on the Committee’s website and via media release.
2.5
The Committee received one submission and one confidential submission. A list of submissions can be found at Appendix A.
2.6
On 25 January 2022, the Committee conducted a project briefing, and public and in-camera hearings via videoconference. A transcript of the public hearing is available on the Committee’s website.
Need for the works
2.7
Services Australia is ‘responsible for the delivery of advice and high-quality, accessible social, health and child support services and payments.’ To support the ongoing delivery of these services, the Agency is seeking to consolidate nine of its currently leased sites in the Brisbane Central Business District ‘to deliver operational and financial efficiencies’.
2.8
The Agency currently leases 47,188m² of office accommodation providing 2,482 work points across nine sites (11 leases) in Brisbane. Out of the nine existing sites in Brisbane identified for consolidation, five sites are within two kilometres, and four sites are within 20 kilometres of the new building.
2.9
The locations of the nine current Services Australia sites in Brisbane are listed below:
143 Turbot Street, Brisbane;
226 Queen Street, Brisbane;
140 Creek Street, Brisbane;
400 George Street, Brisbane;
140 Elizabeth Street, Brisbane;
25 Merivale Street, Brisbane;
1283-1285 Sandgate Road, Nundah;
418-516 Logan Road, Stones Corner; and
20 Wirraway Parade, Inala.
2.10
Services Australia stated that the majority of the nine current sites are ‘approaching the end of their economic life’, and ‘to ensure efficient and effective performance into the future, they will require significant base building and fit-out refurbishment.’
2.11
At the public hearing, the Agency stated that the key objective of the proposed works is ‘to ensure the workplace is a purpose-built space that consolidates our operations in Brisbane, while enhancing collaboration and improving our operational effectiveness’.
2.12
Services Australia confirmed that the lease consolidation would not impact customer facing services and will not reduce Agency jobs in Brisbane.
Options considered
2.13
Services Australia stated in their submission that they considered the following five options for the project:
Option 1: Renew existing leases (status quo);
Option 2: Build, own and operate a new site;
Option 3: Alternative funding arrangements;
Option 4: Occupy other existing Commonwealth leased/owned properties; and
Option 5: Lease a new site (preferred option).
2.14
Services Australia stated that the renewal of existing leases was discounted as the option would have a higher ongoing operating cost, due to the older age of the buildings, and ‘will require significant investment to ensure they are maintained to adequate operational standards.’ Furthermore, progressive building refurbishments and new fit-outs across nine sites could take in excess of 24 months to complete, which would be disruptive to staff and the Agency operations.
2.15
Option 2, Build, own and operate a new site, was discounted as the Agency stated that ‘working accommodation can be most efficiently provided via commercial means’ providing better value for money outcomes.
2.16
Services Australia discounted Option 3 of using a “Public Private Partnership” or hybrid financing model to develop and operate the working accommodation as the Agency stated that ‘alternative funding models do not provide better value for money than a lease model.’
2.17
Services Australia stated that the Department of Finance was consulted regarding the availability of suitable Commonwealth accommodation (Option 4), however the Agency was advised that nothing suitable was available.
2.18
Following an approach to market in September 2019, a range of Expression of Interests were assessed over the initial 10-year period with two further five-year options. Services Australia stated that the financial and qualitative analysis indicated that Option 5 (new leased site) at 205 North Quay would provide the best value for money outcome for the Commonwealth.
Scope of the works
2.19
Services Australia proposes to occupy 55,221 square metres (gross floor area) of mixed-use commercial building space split across 33 storeys at 205 North Quay, Brisbane.
2.20
Services Australia will be the sole office tenant, occupying 43,700 square metres of net lettable area. This represents a 7% reduction in comparison to the current net lettable area across the 11 current Brisbane leases.
2.21
The scope of works for the proposed fit-out at 205 North Quay include the following:
Integration of services into the base building works including electrical, air conditioning, ventilation, lighting control, voice and data communications, audio visual equipment, security, fire and hydraulic services;
Office accommodation including easily removable partitioning for individual offices, meeting and conference rooms, reception areas, utility and storerooms, secure rooms, training rooms, break-out and staff amenities and communication equipment rooms;
3,617 workstations (1.8 metres long by 0.8 metres deep) at a density of 12m² per workpoint, configured in an open plan layout;
Team and workstation based storage to support the staff and their operations;
Personal lockers to cater for 20% more staff to allow for future flexibility;
Loose furniture including tables and chairs for meeting rooms and lunchrooms;
14 offices for Senior Executive staff; and
195 meeting and coaching rooms of varying size.
2.22
When questioned by the Committee on the available room for growth at the new site, Services Australia stated that:
I think it's fair to say that, like most employers these days, we are trying to be a modern employer and be flexible in the way that we engage staff. There would be no surprises in saying that, over time, we will have more people working flexibly.... Exactly what that looks like is yet to be determined. But you can assume there will be a proportion of people who won't be required to come into the workplace every day. Of course, we will still require some people to come to work, simply by the nature of what we do, the sensitive conversations that they have to have and also the sensitive information that they need to handle. But the exact figures in terms of how many people will work from home or work flexibly are yet to be determined formally.
Staff consultation
2.23
The proposed works will result in the movement of 3,559 back of house staff and corporate staff:
755 staff from 143 Turbot Street;
212 staff from 226 Queen Street;
785 staff from 140 Creek Street;
614 staff from 400 George Street;
810 staff from 140 Elizabeth Street;
185 staff from 25 Merivale Street;
52 staff from 1283-1285 Sandgate Road;
38 staff from 418-516 Logan Road; and
97 staff from 20 Wirraway Parade.
2.24
With regard to staff consultation Services Australia stated that:
During the design and development phase the agency will undertake interactive design sessions with business areas to understand the design and ensure it is fit for purpose. Staff are our key stakeholders, and their input will significantly form the design of the agency's fit-out. Staff will continue to be engaged, including from the commencement of the works through to relocation.
2.25
In response to questions from the Committee about the impact of the relocation on staff, Services Australia stated that at the time of the public hearing staff had not raised any issues or concerns.
2.26
Services Australia stated that it had been engaging with the Community and Public Sector Union (CPSU) on a fortnightly basis, and had advised the CPSU of the proposed works in December 2019.
2.27
Additionally, the Agency stated that it has created a number of interactive staff working groups:
The interactive staff working groups are actually meeting fortnightly now, every two weeks. Feedback has been positive. The design sessions are really factored in based on an understanding of the building and the future usage of the building, including new work practices et cetera. The remote locations, non-CBD locations, are included in that. To date, any issue that has been raised has been addressed in the current design or future design.
Cost of the works
2.28
Services Australia’s proposed fit-out of new leased premises at 205 North Quay, Brisbane, Queensland, has an estimated total cost of $89.36 million exclusive of GST.
2.29
Services Australia told the Committee that funding for the lease and fit-out of 205 North Quay, Brisbane will come from the Agency's approved property-operating expenses and capital budgets and incentive contributions.
2.30
The Agency provided further details on project costings in its confidential submission and during an in-camera hearing.
2.31
Services Australia told the Committee that the proposed fit-out has an estimated cost of $2,045 (excluding GST) per square metre which ‘is attributable to the higher density proposed for the new building and reflects post COVID prices.’
2.32
The Committee is satisfied that the costings provided for the project have been adequately assessed by the proponent entity.
Revenue
2.33
There will be no direct revenue generated by the project.
Committee comment
2.34
The Committee acknowledges the impact of COVID-19 on the construction industry and recognises that the increases in raw materials and labour have impacted the overall budget for the project, resulting in a higher-than-average cost per square metre.
2.35
While the Committee was concerned that the number of proposed workstations does not leave much room for future growth at 205 North Quay, it was pleased to hear that Services Australia is investigating a number of flexible working options which it hopes will reduce the number of staff required to attend the workplace every day.
2.36
The Committee did not identify any issues of concern with the proposal and is satisfied that the project has merit in terms of need, scope and cost.
2.37
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.
2.38
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 works: Services Australia — Fit-out of New Leased Premises at 205 North Quay, Brisbane, Queensland.
2.39
Proponent entities must notify the Committee of any changes to the project scope, time, cost, function or design. The Committee also requires that a post-implementation report be provided within three months of project completion. A report template can be found on the Committee’s website.