Services Australia is pressing ahead with plans to move to convert 5 suburban offices into one riverfront high-rise office. The fit-out alone will cost taxpayers $89 million. After that, the leasing costs for the high-rise office will be $1.7 million a year more expensive than Service Australia spent on leases for the entire financial year.

How on earth can an extra $91 million cost be justified as ‘value for money’ for taxpayers? I certainly don’t feel like it’s money well spent.

Transcript

[Chair] Senator Roberts. So we’ll give Senator Roberts a call.

[Malcolm] Thank you Chair and thank you for being here tonight. Might, also have some questions about Services Australia’s service centres. Services Australia is spending $89 million purely on a fit-out for their expensive new riverfront high rise office in Brisbane. Minister, when Australia has such a huge debt, due to the COVID restrictions, what is the cost benefit that a Services Australia would achieve from year one? And why not postpone it?

[Chair] Senator, you may be surprised to learn that I haven’t done a personal cost benefit analysis on the particular project. But I’m more-

[Malcolm] Wouldn’t most projects have a cost benefit?

[Chair] I’m just saying I haven’t-

[Malcolm] No, no, I mean-

[Chair] Yes, of course. So what I was gonna say is that I would, perhaps, if with your indulgence, ask the agency to please provide the cost or the justification for that particular project.

[Services Australia] Senator, we support a work force that’s over 30,000 people. We require both office space and as I’ve outlined, have a range of service centres and residential properties. We have 392 commercial properties. We are where we can looking at ways to reduce the overall costs of the office footprint. And so you will see us in places like Brisbane, amalgamating some of the office space. They all go through a proper procurement process, which in the whole and the whole cost benefit analysis is looked at. It is important to that we maintain office space that meets contemporary work, health and safety standards. And is able to manage a modern and contemporary technology. So all of those aspects go into ensuring that office space remains fit for purpose. And I can assure you that we look very carefully at making sure we manage our property footprint and service centres within the agency’s envelope for property.

[Malcolm] Thank you. Looking at some of the, I think five service centres, from the suburbs in Brisbane are being amalgamated into one, downtown?

[Services Australia] No not service centres. We need to be very clear about that. The service centres are separate. We are looking to amalgamate a smattering of different back office leases into a better fit for purpose centre.

[Malcolm] So these are not service outlets?

[Services Australia] No senator.

[Malcolm] Okay. They’re not customer-

[Services Australia] They’re not shop fronts if you like. So we, as I said, we’ve got a very large workforce. Most of our telephony and things are done in big smart centres, we have large technical workforce lawyers, all sorts of people. We all work in offices and we have 318 shop fronts and then access and agents points. We also do have some residential properties to support our remote and regional servicing.

[Malcolm] From the figures I’ve got, the annual, the current annual leasing bill for Services Australia in Brisbane, this financial year, is 32.35 million or 1.73 million cheaper than the proposed new building. That’s per annum. Are there any risks to productivity? Because of-

[Services Australia] There’s no, no Senator, there’s no risks to productivity.

[Malcolm] So you’re gonna pay more to go downtown? 1.73 million more?

[Services Australia] I will take on notice… Lease costs are renegotiated at various points in the leases of other buildings anyway. So extrapolating how other lease costs may have gone up around a single lease. Let me take on notice particular details around the five sites versus the cost of the one.

[Malcolm] Okay, thank you. How many public servants in your department are now working from home?

[Services Australia] For various reasons we have around 10,000 people working from home. So Services Australia has a mixed workforce. So some 28, 29,000 Australian public servants, but there are also service delivery partners that support us. And some, and contractors, particularly in our ICT space. So a number of those people were also working from home and some of our service delivery partners have been able to work from home. But broadly about 10,000 people are working from home as part of the Services Australia at the moment.

[Malcolm] Is there any reluctance from people coming back to the office?

[Services Australia] We’ve not experienced that we’ve had. We are nationally distributed. So our workforce, we manage our workforce against each of the state and territory requirements. For example, we had many more people working from home in Victoria for large parts of last year In Canberra, most people were still coming into the office if they to work; we’ve seen different arrangements through Omicron. You know, our work is our people both work from home and come to the office and we haven’t had any real issues with people coming and going in that arrangement.

[Malcolm] Yeah, thank you. Last question. I understand Services Australia has the federal government’s second largest property portfolio after the Department of Defence and you lease around 720,000, almost 721,000 square metres of commercial property. What do you do to ensure that property costs are reduced and that services are located where they’re needed? I know, I’ve just learned that these are nothing to do with customer interface, but… What are you doing?

[Services Australia] So Senator, I think, as I’ve stated, we are, what you’ve outlined with things like, bringing together five leases in Brisbane, we’ve done something, we’re doing something similar. There’s a new building being built in Adelaide which brings and reduces three or four leases into one. So we are trying to drive an efficient and fit for purpose, office requirements. Every dollar that comes out of my budget into a property is money I can’t use for transformation or other things. So we are very focused on driving an appropriate fit for purpose workspace that delivers the outcomes for the best value, which is as we are required to do, under the PGPA; and consistent with the finance property guidelines.

[Malcolm] So in your response that you’re gonna give me on notice. You’ll be able to tell me why we’re going to go downtown and have $1.73 million more expensive than the current scattered five outlets in five centres in Brisbane.

[Services Australia] Well, I will take on notice that framing of your question and we will-

[Malcolm] And you’ll check the assumption?

[Services Australia] Yeah, we’ll check the assumptions that you’ve got there and own the decision and the context around, the full context of our decision to do that.

[Malcolm] Okay, thank you very much, thank you, Chair.

[Chair] Thank you, Senator.