3.1
The Department of Home Affairs (the Department) seeks approval from the Committee to proceed with the proposed fit-out of 808 Bourke Street, Docklands, Victoria. The aim of the proposal is to consolidate the Department’s three sites in the Melbourne central business district (CBD) and Docklands prior to the expiry of the current leases.
3.2
The estimated cost of the project is $34.26 million (excluding GST).
3.3
The project was referred to the Committee on 1 December 2021.
Conduct of the inquiry
3.4
Following referral, the inquiry was publicised on the Committee’s website and via media release.
3.5
The Committee received one submission and one confidential submission. A list of submissions can be found at Appendix A.
3.6
On 1 February 2022, the Committee conducted a project briefing, and public and in-camera hearings via teleconference. A transcript of the public hearing is available on the Committee’s website.
Need for the works
3.7
Currently, the Department’s Melbourne presence is spread across three sites:
2 Lonsdale Street, Melbourne CBD
50 Lonsdale Street, Melbourne CBD
1010 La Trobe Street, Docklands.
3.8
Combined, these sites provide 21,526 square metres of leased office space, and all three leases will expire by March 2023 with no further options for lease renewal. Additionally, the current fit-out in some tenancies ‘are no longer fit for purpose and beyond their design life’.
3.9
As a result, according to the Department ‘it was identified that it was no longer necessary to maintain multiple leased sites’ and ‘the consolidation of the three office and operational sites would optimise operational efficiencies’.
Options considered
3.10
The Department stated that it considered three options.
3.11
The first option was to ‘do nothing’. This was considered unsuitable as not sourcing new accommodation in light of the lack of options for further renewal at the existing leases was ‘intolerable’ as it would lead to the Department not having ‘enough office space to accommodate all staff and high-level operational facilities’. This would lead to the ‘displacement of approximately 1,740 departmental staff across 27 divisions’, putting at risk ‘the security of Australian borders’ and resulting in reduced ability to provide services to the public.
3.12
Additionally, the Department considered not conducting a fit-out of
808 Bourke Street. However, this was discounted as:
The existing building does not meet Home Affairs high security and ICT requirements and standards. It is an essential security requirement to separate front of house (public) services from staff entrances and the existing fit-out in the new building provides no feasible way to safely and functionally achieve this.
3.13
Option two – the construction of a new building – was considered unsuitable due to the need to vacate existing sites by March 2023. According to the Department:
The time frames expected for site acquisition, consultant and contractor procurement, design and construction would be unable to be completed prior to the need to vacate existing tenancies.
3.14
The third option examined – the current proposal – was considered to meet all of the Department’s requirements and be achievable within the required timeframe. The Department noted that an additional advantage was the inclusion of a lease incentive, which ‘reduced the upfront capital investment’.
3.15
Following the examination of these options, the Department commenced work to identify suitable alternative working accommodation:
Existing office spaces between 20,000 and 25,000 square metres of quality grade space in and around the Melbourne metropolitan area, situated within a major business/residential district, with proximity to primary road transport and major public transport hubs were considered.
3.16
Of the options identified, 808 Bourke Street was considered the best proposal due to:
Total lease costs per square metre;
Total whole of life costs per annum;
Timing of building availability;
Location of the building and proximity to public transport and existing tenancy; and
The opportunity for the entire building to be leased by Home Affairs (this excludes Landlord plant/services, loading dock, end of trip facilities, a retail space and car-parking for the other adjoining building).
Scope of the works
3.17
In its submission, the Department outlined the key considerations in developing the design of the proposed works, including:
The need to securely create two separate entrances for front of house public facing services (clients/customers) and a separate entrance for staff. This is the reason for the structural works required on the ground floor to create a new passageway. Additional entrances in the glass façade will also need to be facilitated for the same reason.
Customer service access was also a key aspect of the design consideration, particularly how to enable effective vertical transport for the customer and staff from the ground floor to levels 3 and 8 where most customer engagement will occur (Ground Floor, Level 1, Level 1A and 2 are carparks). Given the vertical distance of level three and eight, stair access is non-compliant from Disability Access and Workplace Health and Safety perspectives, therefore a dividing wall and allocation of separate secure lifts for clients and staff is being incorporated.
The security required to the new tenancy for the safety of staff and clients including both electrical and physical security. Home Affairs security standards include the requirement for CCTV, access control, perimeter treatments including hostile vehicle management, treatment to the glass and tamper-evidence treatments to the internal facades.
3.18
The proposed scope includes ‘modification of approximately 1,786 open plan work points’ and the installation of approximately 104 new work points. Currently, the Department requires space for 1,740 staff in Melbourne. The proposed works provide 150 desks to accommodate future growth in staff numbers. The number of work points will allow for each staff member to have an allocated permanent desk if required.
3.19
The design provides an occupational density of 12.42 square metres per person, compared to 11.95 square metres in the existing sites. While the Department stated that ‘the new fit-out has not been designed specifically for operation within a COVID-19 (or similar) environment’, it has considered this, and aspects have been incorporated into the proposed design.
3.20
In addition to these work points, the scope includes front of house services to the public, construction of executive offices, quiet rooms, meeting rooms and training rooms.
Staff consultation
3.21
The proposed works will result in the movement of 1,740 staff across
27 divisions: 157 staff from 50 Lonsdale Street; 746 staff from 2 Lonsdale Street; and 837 staff from 1010 La Trobe Street.
3.22
According to the Department:
To achieve the project objectives and maximise its benefits, comprehensive and well-structured consultation is paramount. The Department is a major employer and thus amenities have an impact on staff satisfaction and retention.
3.23
As a result, the Department told the Committee that it has consulted with the ‘Division Heads across all 27 Divisions throughout the life of the project’.
3.24
Additionally, the Department stated that it has created a project working group:
We have representatives from each building on that working group, as well as senior executive sponsors and members of the [Community and Public Sector Union]. There have actually been no negative comments or concerns raised through this working group, or through other forums which we’ve established – a mailbox, an intranet page and the like. This relocation has actually been received positively by staff.
Cost of the works
3.25
The Department of Home Affairs proposed fit-out of 808 Bourke Street, Docklands, Victoria has an estimated cost of
$34.26 million, exclusive of GST.
3.26
The Department told the Committee that $19.1 million is being funded by a lease incentive, with the remainder funded via internal departmental budget processes.
3.27
The Department provided further details on project costings in its confidential submission and during an in-camera hearing.
3.28
The proposed works have an estimated cost of $1,390 per square metre.
3.29
The Committee is satisfied that the costings provided for the project have been adequately assessed by the proponent entity.
Revenue
3.30
According to the Department:
While the works will support the provision of services which generate revenue, the works will not result in a net difference in current revenue generated, as the works only seek to consolidate these existing revenue producing services.
Committee comment
3.31
The Committee notes both the relatively low cost per square metre for the proposed works, and the fact that more than half of the overall cost is funding via a lease incentive. Coupled with an annual savings generated by reduced lease costs, this project presents a value for money proposition while also maintaining the Department’s functions and provision of services in the Melbourne area.
3.32
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.
3.33
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.
3.34
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: Department of Home Affairs — Proposed Fit-out of 808 Bourke Street, Docklands, Victoria.
3.35
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.