2.1
The Australian Securities & Investments Commission (ASIC) seeks approval from the Committee to proceed with the proposed fit out of new leased premises at 100 Market Street, Sydney NSW. The aim of the project is to align ASIC’s Sydney office with the standard Activity Based Working (ABW) fit out model, and facilitate an increase in Sydney staff numbers following the $404 million in additional funding provided to implement the recommendations from the Royal Commission into Misconduct in the Banking Superannuation and Financial Services Industry (Banking Royal Commission).
2.2
The estimated cost of the project is $29.8 million (excluding GST).
2.3
The project was referred to the Committee on 27 November 2019.
Conduct of the inquiry
2.4
Following referral, the inquiry was publicised on the Committee’s website and via media release.
2.5
The Committee received one submission, one supplementary submission and one confidential submission. A list of submissions can be found at Appendix A.
2.6
On 14 February 2020, the Committee conducted a project briefing, public and in-camera hearing in Sydney, New South Wales. A transcript of the public hearing is available on the Committee’s website.
Need for the works
2.7
ASIC is Australia's integrated corporate, markets, financial services and consumer credit regulator. As an independent Commonwealth Government body, ASIC administers the Australian Securities and Investments Commission Act 2001 (ASIC Act) and carries out most of its work under the Corporations Act 2001 (Corporations Act).
2.8
It is the role of ASIC under the ASIC Act to maintain, facilitate and improve the performance of the financial system, administer the law effectively, and enforce and give effect to the law. In their submission to the committee, ASIC stated that:
Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the announcement in March 2019 of $404m increase in ASIC’s funding, ASIC’s property portfolio has been placed under immediate increased pressure in all offices, including Sydney.
2.9
ASIC’s Sydney office is currently located at 100 Market Street and accommodates 1,078 staff in 1,062 traditional workpoints over 18,475 meters squared. However, as a result of the increase in funding from the Royal Commission, ASIC estimates Sydney staff numbers will increase to approximately 1,350 from July 2020.
2.10
In planning for the expiry of the current lease on 31st March 2020 at 100 Market Street Sydney, and the estimated staff increase, ASIC told the Committee that it ‘sought expressions of interest from the market in January 2018 to establish whether there might be more suitable accommodation to meet future needs.’ ASIC stated that:
…as a result of that process, ASIC identified the existing 100 Market Street premises as providing the best value for money lease option, given the financial offering of a below market rent and strong landlord incentive, its location and accessibility to stakeholders and available amenity for staff.
2.11
ASIC told the Committee that:
To ensure ASIC’s Sydney office can accommodate required staff numbers in a flexible and efficient manner, a full office fit out project is proposed. The current fit out has reached the end of its usable life and does not meet the Commonwealth’s density requirements. It also does not encourage or enable more modern ways of working where workplace settings better support the activities staff are undertaking, respond to and incorporate new technology and support great collaboration and increased innovation.
2.12
In addition, ASIC stated in their submission that as a result of a national consultation process in 2014, ‘ASIC has developed its own Activity Based Working (ABW) model…[that] will improve the workplace density from 16.3 square meters per workpoint in the current fit out to 11.6 square meters’.
2.13
At the public hearing Ms Dixon told the Committee that:
[ASIC’s] standard ABW fit out is based on ASICs specific operational requirements and work practices and will position ASIC for the future, allowing us to attract and retain staff and be flexible with growth requirements… ASIC’s ABW fit out has already been delivered in Adelaide, Hobart, and Perth offices, and is currently being implemented in Melbourne.
Options considered
2.14
In their submission, ASIC noted that:
…an Evaluation Committee (EC) was established to consider, in detail final submissions and a methodology was designed to objectively assess the best option on a value for money basis. The EC assessed the Expression of Interest’s short-listed seven buildings and requested Final Proposals.
2.15
Based on the responses received, ASIC had three options to consider:
a.
Remain at 100 Market Street with a new 10-year lease;
b.
Remain at 100 Market Street and exercise the 5-year option on the current lease; or
c.
Relocate to a new premise.
2.16
ASIC explained that it assessed and considered the option to remain at 100 Market Street with a new 10-year lease and a reduced Net Lettable Area footprint as the preferred option.
2.17
ASIC determined that Option 2 - to remain at 100 Market Street and exercise the 5- year option on the current lease should be discounted as it only allowed for ASIC to reduce their tenancy by one floor and would not achieve the required savings across the life of the lease.
2.18
ASIC discounted Option 3 - to relocate to a new premise as Colliers International identified that a key risk was the timing that the new premises would need to be completed and ASIC fully relocated by the 1st April 2020.
Scope of the works
2.19
The proposed ASIC fit out will be over part levels 5 and 6, and levels 7-10 at 100 Market Street, Sydney, and includes:
a.
Supplementary air-conditioning in rooms with higher than normal cooling and ventilation requirements
b.
Lighting control system to reduce energy consumption in tenant areas including the ability to automatically turn off lights in unoccupied rooms and to provide reduced lighting levels when appropriate
c.
Data cabling throughout the tenant areas including data outlets at each work point (designed to cater for future requirements)
d.
Tenant fit out works to conform to ASIC’s operational requirements including security (including door hardware and electronic access control at entrances and internal areas with higher than normal security needs)
e.
Supplementation of the base building fire services where required
f.
Office accommodation to meet ASIC’s Standard ABW (ASA) model, including a general office fit out, open plan work areas, breakout spaces, quiet rooms and casual meeting spaces
g.
Shared amenities, including kitchen hub areas, storage facilities, first aid room, multi-use room and individually assigned lockers
h.
A robust security system that protects ASIC information, people, assets and operations, including secure areas to Zone 2 with card readers on exit and Zone 4, conforming with ASIO Technical requirements
Staff consultation
2.20
At the public hearing ASIC told the Committee that in preparation for the proposed works, it had consulted extensively with staff in most offices over the past 5 years to ensure consistency and ensure it had a good understanding of what activities staff were undertaking, what type of work environment and technology was required to enable to staff to complete their work effectively.
2.21
ASIC stated that ‘specialist and key stakeholder teams in Sydney have been consulted to determine specific requirements for areas such as the Commission, Evidence Services, the Information Resource Centre, and IT.’
2.22
In addition, ASIC noted in their submission that ‘a Sydney Stakeholder team has been established including local representatives from each team, as a communication point for staff on the ABW implementation, to consider and develop etiquettes for the space, and assist with the change program.’
2.23
ASIC stated that an intranet page has been established to provide staff with updates ‘on ABW projects in their office, including Sydney’. ASIC noted that ‘regular all-staff emails and updates are posted to ensure staff are kept abreast of the project progress.’
2.24
At the public hearing the Committee asked ASIC what feedback had been received by staff in other sites where ASIC’s ABW model had been established. ASIC told the Committee that the positive feedback focused largely on the flexibility that the new workspace provided and praised the technological support provided by ASIC to support team based work. ASIC noted that some of the negative feedback focused largely on the change management elements of the project and the difficulties some staff were having adapting to the new work environment.
Community consultation
2.25
ASIC stated that ‘construction of the fit out will impact positively on the local economy with employment in the private sector’. ASIC estimate that during construction, ‘on average it is anticipated there will be 50 people employed on site for the 12-month period, with up to 100 people employed off-site during peak periods. It is estimated that up to 300 people will work on various stages of the project through the design and construction.’
2.26
At the public hearing the Committee asked ASIC about the impact of the project on its current sublease with the Future Fund. ASIC stated that:
When we went to the market we did a joint approach to market with the Future Fund and Treasury as part of the Commonwealth's approach to how they manage property now. We've consulted with the Future Fund. The Future Fund will also have their own separate tenancy in 100 Market Street. Our meeting space on level 5 gets used by a number of Commonwealth agencies, and they will ensure that in their fit-out as well. We will have arrangements with them if they wish to use our meeting rooms as well, in the public spaces, and get better use out of those.
Cost of the works
2.27
Australian Securities & Investments Commission Proposed Fit out of New Leased Premises at 100 Market Street, Sydney has an estimated cost of $29.8 million, exclusive of GST.
2.28
ASIC provided further details on project costings in its confidential submission and during an in-camera hearing.
2.29
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.
2.30
The Committee was pleased to hear that the fit out will be fully funded through ASIC’s Departmental Capital Works Budget allocation, which will be fully funded via the new lease incentive of approximately $34.4 million.
Revenue
2.31
ASIC stated in their submission that ‘the operating cost benefits from the new fit out, through the increase flexibility and utilisation of net lettable area, and the reduction of costs of maintenance of the aging fit out will also contribute to the overall cost savings.’
2.32
There is no direct revenue from this project.
Committee comment
2.33
The Committee recognises the effort made by ASIC to engage with staff and reiterates that changes to working environments need to be carefully undertaken to ensure minimal impact to staff. The Committee encourages ASIC to continue to seek feedback from staff and to ensure that staff remain informed and engaged throughout the transition to the new working environment.
2.34
The Committee recognises the Australian Government’s Office occupancy target of 14 meters square of usable office area per occupied work-point and notes that ASIC is proposing a target of 11.6 meters squared for this project, a reduction of 4.7 meters squared on the current fit out. The Committee encourages ASIC to ensure that the final design provides staff with adequate space and amenities in which to comfortably conduct their work.
2.35
The Committee is concerned that ASIC considers the current fit out at 100 Market Street as having reached its end-of-life whilst only being 10 years of age. The Committee encourages ASIC to reutilise as many elements of the current fit out as practically feasible and to consider a longer life span in the design for the proposed fit out.
2.36
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.
2.37
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: Australian Securities & Investments Commission Proposed Fit Out of New Leased Premises at 100 Market Street, Sydney
2.38
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.