Defence Housing Australia (DHA) seeks approval from the Committee to upgrade housing for Australian Defence Force (ADF) personnel and their families at Seaward Village, in the Perth suburb of Swanbourne in Western Australia.
The estimated cost of the project is $48.3 million (including GST).
The project was referred to the Committee on 1 December 2017.
Conduct of the inquiry
Following referral, the inquiry was publicised on the Committee’s website and via media release.
The Committee received one submission and two confidential submission from DHA. A list of submissions can be found at Appendix A.
On 3 February 2017, the Committee conducted a public and in-camera hearing. A transcript of the public hearing is available on the Committee’s website.
Need for the works
Seaward Village is an enclave of 153 houses that are owned by DHA and are reserved for ADF personnel and their families. It is located adjacent to Campbell Barracks, and is mostly occupied by members of the Special Air Service Regiment (SASR) and their families.
In 2015 the Committee examined and approved a project to redevelop Campbell Barracks for $223.6 million, excluding GST. The primary objective of the project was to provide Campbell Barracks with functional and flexible purpose-built facilities and upgrade ageing infrastructure.
The Committee has a long-standing interest in developments at Seaward Village. In 2015, during the Committee’s review of the redevelopment of Campbell Barracks, significant concerns about the future of Seaward Village were raised by witnesses.
While potential future works at Seaward Village were outside the scope of the inquiry into the Campbell Barracks redevelopment, the Committee nonetheless took a strong interest in the future of Seaward Village, in particular the potential for changes to housing at Seaward Village to result in increased security risk at Campbell Barracks. As a result, the Committee made a recommendation that it be briefed on the outcomes of a review of security at Campbell Barracks.
In its submission, DHA states that the ‘housing at Seaward Village was largely constructed during the 1980s and 1990s’. DHA told the Committee that:
The Seaward Village housing is affected by the local coastal climate with winds depositing salt spray which accelerates corrosion of some metal surfaces. Being a valley facing the cost, the area is also affected by on-shore winds and storms which have caused damage on past occasions.
Furthermore, according to DHA:
Community housing standards have improved since these houses were constructed. Reflecting this, the Department of Defence minimum standard was updated in 2007 with an expectation that all Defence-owned and DHA housing would be brought up to these standards by 30 June 2017.
DHA notes that to date only 37 houses have been upgraded since construction, and that 43 houses at Seaward Village do not meet the new minimum standard. The new standards include a range of amenities, including a minimum of three bedrooms, separate lounge and dining, ensuite bathrooms, lock-up garage, specific security features, covered outdoor areas and a minimum yard size.
In its submission, DHA notes that it uses two options for the provision of housing around Australia:
The acquisition of ‘broad acre’ land followed by development and construction. This method of delivering housing for ADF members enables DHA to benefit from economies of scale associated with bulk procurement of house constructions, surety of supply and higher margins associated with wholesale land development can be better realised.
The construction of on-base housing, the purchase of developed land (serviced allotments) followed by construction, the purchase of established houses, the upgrade of existing houses and the direct leasing of suitable housing are also considered, as necessary.
In the case of Seaward Village, DHA originally proposed to redevelop the area and rebuild the entire precinct. DHA proposed to increase the total number of DHA houses from 153 to 165, and to sell of the excess land to partly fund the total rebuild.
This proposal was raised with the Committee in 2015, during its inquiry into the Campbell Barracks Redevelopment Project. The Committee received three submissions on the Seaward Village redevelopment proposal, and also received further evidence at the public hearing for that inquiry.
The Committee found that there was considerable local concern about the redevelopment proposal. Matters raised with the Committee in relation to the proposed Seaward Village redevelopment included:
Potential increased risks to the safety and security of Campbell Barracks, as well as to military personnel and families living in Seaward Village;
Risk of disrupting training activities on Campbell Barracks; and
A lack of collaboration between Defence and DHA regarding the Seaward Village and Campbell Barracks redevelopment projects.
Following representations from state and federal elected representatives, in November 2015, the government commissioned a review of the proposed redevelopment by Lieutenant-General (Retired) Mark Evans AO, DSC. The final report was presented to government in February 2016, with the following recommendations:
The redevelopment of Seaward Village should not proceed;
The existing covenant, that prevents DHA from selling or leasing any of the land to private citizens, should remain in place and the sale of land in Seaward Village should not be considered in the short to mid-terms;
A refurbishment program for Seaward Village should be initiated as soon as possible, designed to provide high quality refurbished houses and reduce disruption to ADF members and their families;
Consideration should be given to ownership transfer of Seaward Village from DHA to Defence in the long term; and
Robust communication strategies should be developed to support the refurbishment program.
DHA told the Committee that government accepted all of the recommendations except for the transfer of ownership to Defence. In this letter, Minister McCormack stated:
The refurbishment option is preferred as it carries less complexity and risk in relation to the potential impact of housing encroachment on training activities at Campbell Barracks and timely project completion, in addition to improved morale for families.
Scope of the works
The project proposed by DHA involves upgrading all 153 houses at Seaward Village, and ‘possibly the replacement of up to about ten houses’, in order make the housing compliant with Defence Housing Classification Policy minimum standards.
DHA anticipates that there will be three levels of upgrades to housing:
Major upgrade with extension (for 43 transitional houses that are non-compliant with Defence minimum standard, generally requiring an additional bathroom);
Major upgrade (generally bathrooms, kitchen, laundry, floor and window coverings, full internal and external repainting for 110 houses); and
Potential knockdown and rebuild of up to 10 houses.
At the public hearing, DHA updated the Committee on the potential need to knockdown and rebuild houses at Seaward Village:
The review that our consultants have taken in looking at the structural integrity of the houses… so far suggests that we have not found any that we would need to demolish. There is a minor risk that we could still find some as we complete the works, but our belief is it will be a very low number, if any.
DHA further stated that it would assess each house’s individual structural integrity to determine whether a rebuild or refurbishment was ‘more commercially appropriate’.
Similarly, while DHA notes that the upgrades required ‘will be specific to each property’, they will generally include:
Full internal and external refurbishment including new kitchens, bathrooms, floor and window coverings, new fixtures and fittings and repainting throughout. The upgrade works will also include the replacement of driveways where necessary, the maintenance of existing vegetation and trees and the improvement of all soft and hard landscaping and the rectification of all structural landscaping (mostly existing retaining walls).
Additionally, DHA proposed to install ‘modern, efficient’ reverse cycle air conditioning in every house ‘as the current evaporative cooling systems have reached the end of their economic lifespan and the unflued gas heaters currently in use are no longer considered an appropriate form of heating’.
Subject to Parliamentary approval, construction is expected to take place over three phases:
Phase 1 (58 houses) – May 2017-May 2018;
Phase 2 (43 houses) – May 2018-May 2019;
Phase 2 (53 houses) – May 2019-May 2020.
DHA explained why the phased approach to construction had been selected:
This phasing is based upon the upgrade model which was successfully completed at RAAF Base Tindal. It has been selected after extensive consultation, with the overwhelming majority of stakeholders in agreement that it maximises resident safety and security, prioritises the upgrading of houses in the worst condition and minimises disruption from construction works. It also delivers the project over the briefest duration, maintains a fair and equitable allocation outcome and lastly, fosters a competitive procurement environment.
At the public hearing, the Committee received evidence from The Hon Wilson Tuckey, former Member for O’Connor and a former Chair of the Public Works Committee. Mr Tuckey made an alternative proposal, stating that ‘refurbishment is a bad option’.
Mr Tuckey instead proposed that the housing at Seaward Village should be demolished and rebuilt. In support of his proposal, Mr Tuckey presented evidence that new housing could be built ‘off-the-shelf’ for between $150,000 and $250,000 per house.
Additionally, Mr Tuckey argued that rebuilding the houses would minimise any potential ongoing maintenance issues that refurbishment would not address. Specifically, Mr Tuckey stated that rebuilding housing would offer the opportunity to replace electrical wiring and sewerage infrastructure within the houses, which ultimately would result in lower maintenance costs in the long term. Overall, Mr Tuckey was of the view that rebuilding the houses represented a more cost-effective approach than the proposed refurbishment.
DHA noted that the difference in overall cost between Mr Tuckey’s proposal and the proposed refurbishment were ‘not as far apart as they may at first seem’. DHA stated that the estimated cost of the refurbishment project did ‘not just include construction or refurbishment costs; they include other costs, which relate to relocation of families, contingency’ and other non-construction costs.
Furthermore, DHA told the Committee that in selecting the refurbishment option, factors other than cost had to be taken into account:
The housing at Seaward Village is regarded as intrinsic to SASR capability, providing housing in close proximity to Campbell Barracks commensurate with high-readiness requirements, a sense of security for families, social cohesion and support, particularly during periods of high operational tempo.
According to DHA, one of the strengths of the refurbishment option is the ‘length of the upgrade program … is as fast as possible’. DHA stated that the refurbishment option would not only be faster to complete than redevelopment, but would also result in less disruption during the construction:
The option that we have chosen is one that systematically upgrades contiguous groups of houses. That allows us to close off the area just for the construction works and fence off that area. It implies that there will not be people living in between houses that are being upgraded.
The Committee notes the evidence presented by Mr Tuckey, and thanks him for his ongoing commitment to ensuring that the public money spent on building works is used as effectively as possible.
However, the Committee is cognisant that the cost effectiveness of proposed works is only one of the functions of the Committee set out in Section 17(3) of the Public Works Committee Act 1969. The Committee is also required to consider the extent to which the scope of proposed works is suitable to its purpose, and the necessity for carrying out proposed works.
In the case of Seaward Village, the Committee is of the view that redevelopment of Seaward Village is likely to result in considerable disruption for SASR personnel and their families. Not only will a redevelopment take significantly longer to achieve than refurbishment, it will also result in more disruption during the construction phase.
Given the considerable operational tempo experienced by SASR personnel and the impact this has on their families, minimising both the duration and extent of disruption caused by construction works is a reasonable goal. As such, part of the purpose of the project is to provide ADF families with suitable housing with as little disruption as possible.
Cost of the works
The estimated cost of the project is $48.3 million (including GST). It includes construction works, project management and consultancy fees, escalation allowances and contingencies. The project is being funded by both DHA and Defence.
The Committee received a confidential supplementary submission detailing the project costs and held an in-camera hearing with DHA and Defence on the project costs.
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entities.
Given the concerns raised with the Committee in August 2015 about the redevelopment proposal for Seaward Village, and Lieutenant-General Mark Evans’ recommendation that robust communication strategies be developed to support any refurbishment project, the Committee felt it was important to closely examine the community consultations DHA undertook for this project.
DHA told the Committee that this project had been ‘the subject of extensive consultation with a range of stakeholder’, including:
Seaward village residents;
Local and senior Army officers;
The Seaward Village Working Group; and
Representatives of the City of Nedlands.
DHA, together with Defence, conducted two information sessions for residents of Seaward Village in June 2016. According to DHA:
[Residents] were provided an overview of all proposed upgrade options, advantages and disadvantages of each option and the proposed project timelines. Defence and DHA representatives also addressed questions regarding the project and other tenancy issues.
Following the information sessions, DHA stated that it conducted individual interviews with Seaward Village residents:
DHA has conducted individual consultations with each resident in Seaward Village to fully understand their individual circumstances and concerns. The situation as at 11 January 2017 regarding those consultations is that 75 interviews have been completed and 78 interviews have not been undertaken, as 49 houses were vacant and 29 members were posting out of location.
DHA provided an update on consultation efforts at the public hearing:
We have created a communications plan for this specific upgrade option, which talks about engaging with the [ADF] members, educating the members and then implementing the project with the members. We have set up a dedicated website, and an email address has been established. Two dedicated points of contact in the Perth regional office deal with matters related to Seaward Village.
According to DHA, no concerns about the nature of the proposed works were raised by Seaward Village residents. The only concerns raised during these consultations related to ‘the project commencement date, traffic management resulting from construction activities, and the housing allocation process.’
The Committee commends the comprehensive efforts DHA and Defence have made to communicate with Seaward Village residents and other relevant stakeholders. By both providing information on the project to stakeholders, and seeking the views of those who will be directly affected by it, DHA is well placed to ensure that any emerging issues are quickly noticed and can be dealt with effectively.
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 works: upgrades to housing for ADF personnel at Seaward Village, Swanbourne.
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.
The Committee requests that Defence Housing Australia and the Department of Defence provide the Committee with detailed reports which outline the project’s financial position at the end of each of the three phases of the project, and if the Committee requests, provide:
A private briefing on each phase of the project;
Representatives to appear at a public hearing.