Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Parliamentary Standing Committee on Public Works, I present two reports of the committee as listed at item 15 on today's order of business and I move:

That the Senate take note of the reports.

The first is the 3rd report of 2015Fit-out of new leased premises for the Department of Finance, Australian Capital Territory. The second is the committee's 78th Annual Report, which outlines the committee's activities during the calendar year 2014.

Before I speak on the two reports, as the incoming chair of the Public Works Committee, I would like to thank the previous committee chair, the member for McPherson, the Honourable Mrs Karen Andrews MP. Mrs Andrews has been a committed member of the committee since 2010. She chaired the committee from December 2013 to December 2014 and was instrumental in ensuring that the committee's scrutiny role was conducted with diligence and rigour. On behalf of the committee, we extend our congratulations to Mrs Andrews on her promotion to Parliamentary Secretary to the Minister for Industry and Science.

Mr President, the referral for the fit-out of new leased premises in Canberra to be occupied by Finance was received in December 2014. The estimated cost for the fit-out is $32.1 million. Finance proposes to occupy One Canberra Avenue, in Forrest. Currently, Finance's workforce is distributed across numerous buildings, under six tenancy agreements. The new accommodation will allow the agency to consolidate most staff into a single tenancy, with only a small number of specialist staff to be located elsewhere.

On 13 February the committee visited the John Gorton Building, one of Finance's existing tenancies. This was followed by an inspection of the proposed new tenancy at One Canberra Avenue. The committee also held hearings on the same day.

The committee was told that market conditions in Canberra meant that Finance had been offered highly favourable terms for One Canberra Avenue, including a lease incentive to cover the fit-out. The committee questioned some aspects of Finance's cost-benefit analysis, seeking assurance that the proposed relocation and associated fit-out represent best value from a whole-of-government perspective.

In correspondence received after the first hearing, Finance revised its cost-benefit analysis, adding around $120 million to Commonwealth revenue that it advised had been inadvertently omitted. The committee pursued this matter in a second round of hearings and was subsequently reassured that the proposed lease and fit-out is the most cost-effective option.

The committee is therefore satisfied that the project has merit in terms of need, scope and cost, and recommends that the project proceed.

Before moving on, I would comment further on the committee's oversight role. Inevitably, when the committee examines the need for a fit-out, leasing arrangements will be raised and discussed. Although the committee's establishing act does not extend to it the authority to make recommendations in relation to leasing, the committee expects agencies to establish that leasing decisions have been made with due regard to whole-of-government costs and benefits.

Mr President, the second report I present today is the Public Works Committee's 78th annual report. In 2014 the committee reported on 13 works, with a combined cost of $2.3 billion. The committee had 35 meetings, including inspections and public hearings across the country. Projects scrutinised included a proposal to construct 50 tropically-designed dwellings at RAAF Base Tindal, at a cost of $89.4 million. As a result of concerns expressed by the committee, an amended project proposal was submitted for construction of the same number of dwellings but at a cost saving of around $47 million.

During the year the committee approved 38 medium works. These are projects with an estimated cost of between $2 million and $15 million. The combined costs of medium works approved in 2014 were $252 million.

The committee sought referral for inquiry of one additional medium work when it became apparent that the agency concerned had undertaken a series of similar projects in the preceding two years without notifying the committee. The committee has recommended that the Department of Finance write to all Commonwealth agencies reminding them of their obligations to the committee.

In July 2014 a delegation of the committee undertook a visit to Indonesia and Thailand under the leadership of the former chairman. The delegation examined progress on construction of new purpose-built Australian embassy facilities in both Jakarta and Bangkok. In its report on the visit, the delegation observed that both projects were progressing well and are expected to be completed on time and within budget.

Mr President, earlier I referred briefly to the committee's oversight role and the committee's authority under its establishing legislation. The committee is keen to ensure that its powers, processes and practices continue to be relevant in the current construction environment. These are matters that the committee intends to consider further.

In concluding, I commend both reports to the Senate.

Question agreed to.