6 Administrative Services
6B.1.2 Australian Property Group
6B.1.14 Support Services
6B.2.1 Domestic Property Group
6B.7 Australian Electoral Commission
The Commonwealth's privatisation policy principles recognise that purely commercial activities should not be retained within the government sector when numerous alternative suppliers are available. Accordingly, the Government has decided to sell the commercial arm of the Domestic Property Group, formerly a stand-alone business known as the Australian Property Group. This is an element of the Government's longer term strategy of selling off elements of DAS business services which are of an essentially commercial nature.
The Property Group is a national property consulting business representing the interests of tenants (rather than investors) in all property transactions. From 30 April 1996, Australian Property Group (APG) and Australian Estate Management (AEM) were amalgamated to form the Domestic Property Group. It is a specialist provider of accommodation services for Commonwealth agencies and aims to deliver efficient property portfolio management and whole-of-government benefit. It offers three broad service lines: (a) portfolio management, dealing with the day to day physical and financial management of an organisation's property portfolio; (b) contract management, where APG acts as a broker of accommodation services and provides a conduit between government and industry; and (c) strategic and consultancy services, which are aimed at helping organisations match property with their business and operational needs over time.
The outlay consequences of this Budget measure are associated with the handling of surplus staff and properties after the sale. Sale related costs are reported under the Finance portfolio as the sale will be undertaken by the Office of Asset Sales. The estimated proceeds of the sale are commercial-in-confidence and the Government has not provided them for publication.
Although this is a 1997-98 Budget initiative, the Office of Asset Sales has already made progress in the sale of this agency along with other DAS businesses.
The Support Services Sub-program of DAS is concerned with the provision to other elements of DAS of various personnel, financial, information technology and other general services. This initiative is part of the Commonwealth's broader strategy to sell-off elements of the DAS Business Services Program; it stems from the Government's policy of withdrawing from the direct delivery of commercial services which support its own needs.
It is envisaged that the measure will provide new opportunities for the private sector to provide such services in a contestable environment. In future, DAS will no longer provide such services from internal resources. To the extent that DAS businesses may in future come under the control of a range of different and diverse owners, it is evident that the role of this agency is to change over the longer term. During 1995-96, it pursued a strategy of shifting its emphasis from a product delivery approach to a marketing-driven approach, aiming to achieve customer satisfaction in a commercial environment. Appropriately, it has also set goals of consolidating existing markets and developing new markets and has enhanced its revenue earning performance since the mid-1990s.
In moving towards a more business oriented approach, the agency underwent considerable internal restructuring over 1995-96, with staffing levels being reduced from 522 to 457. The agency has placed a high priority on staff education and training and the maintenance and enhancement of staff satisfaction with a view to building an effective and rewarding organisation.
As indicated above, the measure will have an initial cost of $1.5 million in 1997-98, but will provide net outlay savings over the four years from 1997-98 to 2000-01. Redundancy payments will be spread over two years and paid for from within the existing resources of DAS.
Outlays in this Program have decreased significantly, from - $190.6 million in 1996-97 to - $541 million in 1997-98. This reduction in outlays reflects the anticipated sale of real property, with an expected yield of $407.2 million.
Long-term and Transitional Funding for Repairs and Maintenance of Commonwealth Properties
Not only has the Government's decided to sell most of the Commonwealth's commercial properties, it has also decided to implement new funding arrangements for repairs, maintenance and the refurbishment of those properties retained in Commonwealth ownership.
From 1997-98 onwards, instead of payments for such works being financed simply through an appropriation, they will be funded by retaining a proportion of the gross rent paid by the occupiers of such properties. This retained portion of rent will be held in a trust fund.
New Arrangements for Funding Fire Brigade Call-outs
The Government has also decided to implement new funding arrangements to meet the cost of fire protection for those properties retained in Commonwealth ownership. Previously, such costs were financed simply through an appropriation and paid in bulk to the relevant State fire authorities.
From 1997-98 onwards, such costs will be funded by retaining a proportion of the gross rent paid by the occupiers of such properties. This retained portion of rent will be paid to the relevant fire authorities by individual building managers.
Reduction in Major Capital Works
The reduction in outlays in 1997-98 represents the decision to abandon the refurbishment of Scarborough House in Woden, ACT, due to a lack of committed tenants to occupy the building.
On 26 March 1997, the Prime Minister, the Hon. John Howard MP, introduced into the House of Representatives the Constitutional Convention (Election) Bill 1997. This Bill is a consequence of the Government's election promise to hold a convention to debate, amongst other things, whether or not Australia should change its Constitution to become a republic.
The Constitution Convention, planned for December 1997, is to consist of 152 delegates of whom half (76), will be elected by the Australian people by a voluntary postal vote. The Constitutional Convention (Election) Bill 1997 establishes the procedural mechanisms for electing the delegates to the Convention.
The Explanatory Memorandum (p. 2) to the Bill estimates the cost of conducting the election to be approximately $35.6 million.
The Budget provides funding to both the Department of the Prime Minister and Cabinet (PM&C) and the Australian Electoral Commission to organise and conduct the election of delegates to the Convention as well as the Convention itself. In 1997-98, $3.9 million is provided to PM&C for the organisation and conduct of the Convention [See Program 2 in Dept. of Prime Minister and Cabinet, Portfolio Budget Statements] (Budget Related Paper No. 1. 13A). In 1997-98, $24 million is set aside for the Australian Electoral Commission for the cost of electing the delegates. Budget Paper No. 2 also states that up to $12 million of the estimated $36 million for holding the election 'may be incurred during 1996-97 through access to the Advance to the Minister for Finance.'
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