- Proposed Fit-out of New Leased Premises at 15 Sydney Avenue, Barton, ACT
Australian Taxation Office
3.1The Australian Taxation Office (ATO) seeks approval from the Committee to proceed with the proposed fit-out of new leased premises at 15 Sydney Avenue, Barton, ACT.
3.2The purpose of the project is to deliver a fit-for-purpose, safe and flexible workspace at the new Barton site. The proposed works will replace the ATO’s two existing Canberra City sites, consolidating the ATO’s Canberra workforce into a single building and reducing net-lettable area (NLA) by 31,191m2 (a 48 per cent reduction).
3.3The total estimated cost of the fit-out is $125.8 million (excluding GST).
3.4The project was referred on 3 August 2023.
Conduct of inquiry
3.5Following referral, the inquiry was publicised on the Committee’s website and via media release.
3.6The Committee received one submission and one confidential submission. A list of the submissions can be found at Appendix A.
3.7On 19 September 2023, the Committee received a project briefing and conducted a public and in-camera hearing. A transcript of the public hearing is available on the Committee’s website.
Need for the works
3.8The ATO currently leases office space of 22,655m2 NLA at 26 Narellan Street and 42,057m2 NLA at 21 Genge Street, Canberra, with the leases expiring in May and November 2027 respectively.
3.9The ATO moved into its current accommodation in 2007 and has only done minor improvement works since then. The most recent works were completed in 2016 and 2017 and included IT infrastructure upgrades, replacement of breakout area furniture, and a refresh of the senior executive service (SES) office furniture. The majority of these works were undertaken concurrently with landlord works, which included repainting and recarpeting of all ATO floors.
3.10The ATO states that its two current Canberra office fit-outs are at the end of their usable life. As a more traditional office layout, the current offices are not consistent with a modern workplace for technology, amenity, collaboration, serviceability or flexibility. ATO states that relocation or expansion of business teams is not possible in the current offices without costly building works or temporarily relocating staff.
3.11The current staff workstations are over 15 years old and due to their age, large size, lack of serviceability and parts, are not economically viable to maintain or suitable to meet the current Government density targets.
Options considered
3.12The ATO did not provide any options for consideration.
3.13In response to the expiring leases in the two Canberra City sites and the long-term need for a presence in the ACT, the ATO undertook an open approach to market for leased office accommodation for a reduced NLA.
3.14In response to the EOI, six submissions were received. The submissions were evaluated and ranked based on the published evaluation criteria, with the most competitive proceeding to the request for proposal (RFP) stage. Three provided a response to the RFP stage.
3.15The approach to market resulted in the ATO agreeing to a 15-year lease at the Barton site with a maximum of 33,521m2 of NLA.
3.16At the public hearing the ATO stated that:
…the ATO has reduced its office space in Canberra by 48 per cent. That's a significant reduction in our floor space. We've reduced from 64½ thousand square metres to 33½ thousand… This is a significant program of rightsizing and ensuring that we use office accommodation efficiently…part of the lease endorsement process through the Department of Finance is that the ATO needs to demonstrate that it can meet the government's occupational density targetthrough the amount of space that we're leasing. We are able to demonstrate that in the Barton project.
3.17The lease endorsement was received from the Minister for Finance on 29 August 2022 and includes two five-year lease extension options.
Scope of the works
3.18The fit-out will include six levels of office accommodation - ground floor to level five - and purpose-built areas to support critical ATO functions.
3.19The ATO has engaged Cushman & Wakefield as project manager for the fit-out works. Cushman & Wakefield will work with the ATO to ensure value for money is achieved throughout the project.
3.20The fit-out of the Barton site will be designed to accommodate, at a minimum, the existing 2,535 ATO staff located in the Canberra City sites, and will include:
- A-Grade office accommodation with an adaptable work environment
- a robust security system
- enhanced IT infrastructure
- evolving ways of working
- secure personal and team storage lockers.
- The proposed fit-out design has been informed by staff feedback from the delivery of other ATO fit-outs in Brisbane and Sydney. These include:
- 100 per cent sit to stand workstations
- breakout space designs that reduce noise transfer into the general work area
- noise management through the introduction of acoustic barriers between banks of work points
- improved access to natural light through an open plan workspace design.
- The proposed fit-out design and specifications will meet all applicable codes and standards, including access requirements and provision of services. This includes wheelchair access to the building, office areas, door widths and heights, lift arrangements, parking, and staff amenities.
- The design of the building itself will maximise the use of environmentally sustainable and recyclable materials wherever possible, including high recycled content, low toxic emissions, low embodied energy and embodied water, and the ability for material used to be recycled. The building will be designed to achieve a minimum 4.5 Star NABERs Base Building Energy rating and 4.5 Star NABERs Tenancy Energy rating.
- The improved occupational density will be achieved through:
- a fit-for-purpose, flexible workspace that optimises staff experience
- upgraded tenancy services that improves energy efficiency and reduces operating costs
- scalable accommodation that is responsive to the changing needs of the ATO, with minimal cost and disruption
- consolidation of the ATO’s Canberra workforce into a single building, reducing operational overheads.
- At the public hearing the ATO stated that although a proportion of the workforce is expected to work from home, the fit-out allows for scalability of workforce and explained why scalability is needed:
We have seen significant growth in the ATO workforce across a number of sites, and, because we are a national agency, that means that we can then use the flexibility in sites such as Barton, when it has been built, to grow the workforce within that site….We used that when we had COVID and certainly when we were managing a lot of the work that occurred at the tax office during COVID, such as JobKeeper. We're looking at surging our workforce at the moment as a result of a number of measures that the government is looking for us to deliver over the coming four years.
Staff and stakeholder engagement and consultation
3.26The ATO considers staff a key stakeholder and has a planned staff engagement process that will be implemented throughout the project, including the engagement of a Change Management service provider.
3.27The ATO states that the proposal to move to an unallocated workspace, with the ability to reduce desk ratios, will be presented to staff as part of the formal consultation process.
3.28The ATO states that ‘staff are engaged throughout the fit-out design process. The proposed concept design reflects feedback received through survey responses and design workshops held with nominated business line representatives. Feedback received has been shaped into key aspirational themes that continue to guide the fit-out design phase’.
3.29Following the PWC’s recommendation in the PWC Report 3/2023, approving the ATO Hobart fit-out, the ATO has conducted broader staff consultation during the fit-out design phase which has resulted in:
- Increased visibility of the ATO’s Fit-out Design Timeline with all staff. The timeline allows for ongoing staff engagement activities, including working with business line representatives to develop a design proposal that can be presented to staff for formal consultation
- Improved visibility of the nominated Site Working Group representatives for each business line and role they play in the fit-out design process
- Increased email communications providing project updates.
- The ATO provided examples of this broader consultation at the public hearing:
For the Barton project, we have already incorporated significant feedback from business areas in relation to the proposed design. Examples include greater variety of workstation types, breakout rooms moved to take advantage of natural light, and more one- and two-person rooms for high-focus work. Following this committee's recommendation from the ATO Hobart inquiry earlier this year, we have also made changes to our staff engagement process. We have provided greater visibility to Canberra staff of our fit-out design time line, uplifted all staff communications and highlighted how staff can be involved. We have also held discovery workshops with the site working group to explore how staff need to use different spaces in the fit-out, such as meeting and collaboration areas, breakout and general work areas. We have progressed design options that align to what we have heard.
3.31On receiving Parliamentary approval for the fit-out, the ATO will undertake the following staff engagement activities:
- regular meetings with Site Working Group representatives where the project status and other project issues are discussed
- a project-specific intranet site with regular project updates for staff
- a dedicated fit-out project email address
- information sessions with presentations by members of ATO Property and external specialists
- installation of prototype furniture to enable staff to test and provide feedback on task chairs, workstations, storage and technology options
- contributing input on themes and colours for the fit-out.
- The ATO states that the following stakeholders have also been, or will be, consulted and engaged with throughout the fit-out design project:
- ATO Executive
- ATO Business Lines
- ATO Employee Relations and Unions
- ATO Work health and Safety
- ATO Workforce Strategy
- ATO Workplace Diversity
- Staff Unions
- Department of Finance
- Ventia Pty Ltd (Property Services Provider)
- Cushman & Wakefield (Project Manager)
- Interiors Australia Group (Architectural Design)
- Agile Solutions (Change Management Services Provider)
- WSP Australia Pty Limited (Services Engineer)
- WT Partnership (Quantity Surveyor)
- DOMA (developer)
- ATO Indigenous Employment Network
- Workplace Ergonomist.
Cost of the works
3.33The ATO will fund the fit-out within existing departmental funds using a total budget forecast of $125,807,473 GST exclusive. The estimated construction cost includes a contingency to mitigate current and anticipated market pressures and equates to $2,587 per square metre GST exclusive.
3.34Further details on project costings were provided in the ATO’s confidential submission and during an in-camera hearing.
Revenue
3.35There will be no direct revenue generated by this project.
Public value
3.36The ATO states that ‘the delivery of the proposed fit-out at the Barton site provides public value by enabling the ATO to achieve operational and cost efficiencies while continuing to maintain a workforce in the ACT. The project will enable retention of the existing capability in the ACT to deliver on the ATO's Corporate Plan and aspirations’.
3.37The proposed fit-out will reduce the ATO’s property-related emissions, through a 48 per cent reduction in NLA and reduced electricity consumption, in accordance with Energy Efficiency in Government Operations (EEGO) targets and in alignment with the Government’s commitment to net zero emissions for the Australian Public Service (APS).
3.38At the public hearing the ATO stated that:
Following a robust and competitive lease procurement process, the ATO agreed to a 15-year lease at 15 Sydney Avenue Barton, which provided the best overall value for money for the ATO and Commonwealth. The new lease is a reduction in office space of over 31,000 square metres or 48 per cent compared with the ATO's existing leases and will consolidate the ATO's Canberra workforce into a single building. The new Barton lease will provide office space to accommodate the existing Canberra workforce, provide contingency for changes in workforce requirements and flexibility to adapt to changing ways of working over a 15-year period whilst meeting the government occupational density target.
Committee comment
3.39The Committee considers that the ATO’s proposed project should proceed as it is satisfied with the project’s purpose, need, and value for money.
3.40The Committee notes that previous recommendations made by the PWC for greater staff consultation at earlier stages of the design process have been adopted in this project.
3.41The Committee encourages the ATO to continue to monitor the impact of the proposed project on staff travel times. The relocation from Canberra’s central commercial district to the Barton site reduces access to public transport such as light rail and express bus routes.
3.42The Committee encourages the ATO to further consider local and commercial impact assessments given that the proposed project will relocate approximately 2,500 employees out of Canberra’s central commercial district.
3.43The Committee did not identify any issues of concern with the proposal and is satisfied that the project has merit in terms of need, scope and cost.
3.44Having 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.
3.45The 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 Taxation Office, Proposed fit-out of New Leased Premises at 15 Sydney Avenue, Barton, ACT.
3.46Proponent 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.