3.1
The Australian Taxation Office (the ATO) seeks approval from the Committee to proceed with the proposed fit-out of office space in a recently constructed building at 6 Parramatta Square, Parramatta, New South Wales. The aim of the project is to facilitate an exit from the ATO’s current accommodation at 2-12 Macquarie Street, Parramatta, as its lease is expiring on 30 June 2023.
3.2
The estimated cost of the project is $64.38 million (excluding GST).
3.3
The project was referred to the Committee on 3 August 2022.
Conduct of the inquiry
3.4
Following referral, the inquiry was publicised on the Committee’s website and via media release.
3.5
The Committee received two submissions, two supplementary submissions and one confidential submission. A list of submissions can be found at Appendix A.
3.6
On 30 September 2022, the Committee conducted a project briefing, and public and in-camera hearings via videoconference. A transcript of the public hearing is available on the Committee’s website.
Need for the works
3.7
Currently the ATO leases three sites in Sydney: the existing office space at Macquarie Street in Parramatta, one in Penrith and a new site in the Sydney Central Business District (CBD). The newly leased 255 George Street site in the Sydney CBD was approved for a fit-out by the Committee in March 2022, at an estimated cost of $46.32 million (excluding GST).
3.8
The ATO’s current lease at Macquarie Street is due to expire on 30 June 2023. Having identified an ongoing requirement to maintain a presence in Parramatta, the ATO have selected 6 Parramatta Square for the site of the new office, which was endorsed on 11 March 2022.
3.9
The ATO’s relocation to 6 Parramatta Square will reduce office space by
39 per cent from 28,682m2 to 17,551m2, and is the ‘result of rightsizing to reflect the ATO’s requirements and improved fit-out density’.
3.10
The ATO advised that they have leased the Macquarie Street site since 1990. Since then, only minor works have been undertaken, with the most recent works from 2017/2018 being:
critical works to the computer room
refresh of all break out areas and meeting room furniture
construction of quiet rooms on 4 floors
refresh of SES office furniture.
3.11
According to the ATO, its existing premises are nearing the end of its usable life. A particular issue being that ‘workstations are over 20 years old and due to their age, size, lack of serviceability and parts means that they are not suitable to meet current government density targets’.
3.12
The density target is set out by the Commonwealth Property Management Framework (Resource Management Guide 500), with the current target being 14m2 of useable office area per occupied work-point. All new Commonwealth Government leases are expected to meet this target.
3.13
How the ATO will meet this target is discussed in the staff consultation section of this chapter.
Options considered
3.14
In its submission to the Committee, the ATO explained it had considered available options following the current Parramatta locations lease expiry by consulting with: the Strategic Property Adviser (SPA), Department of Finance, and the ATO’s contracted leasing provider Colliers. The ATO stated in its submission that no suitable Commonwealth office space was identified as a result of this process.
3.15
After consultation and market advice from the SPA and Colliers, the ATO conducted a two-stage approach to market for suitable office accommodation in Parramatta utilising the ATO’s property services provider Ventia.
3.16
During this process twelve submissions for the expression-of-interest process were received, with four shortlisted for consideration.
3.17
Following the consideration of the shortlisted options 6 Parramatta Square was identified as suitable. In accordance with the Commonwealth Property Management Framework leasing guidelines, a lease proposal was submitted to the Special Minister of State via the Department of Finance. A lease endorsement was received on 11 March 2022, enabling the ATO to finalise procurement of the 6 Parramatta Square site.
Scope of works
3.18
The ATO proposes to fit-out its newly leased office space at 6 Parramatta Square, which has a total area of 17,551m2 across six and half floors. The proposed lease will last until 2033 at minimum, and the proposed works have been designed to meet anticipated operational requirements until then. Plans of the proposed design were provided by the ATO in its submission to the Committee.
3.19
6 Parramatta Square will be delivered to the ATO as a warm shell, meaning it will be fit-out ready with ceilings, lighting, flooring, toilets, plumbing, and air-conditioning finished and included.
3.20
The ATO’s fit-out will be 'undertaken in line with relevant building legislation as well as its own building guidelines and specifications’. Specifically, the ATO have noted that the fit-out design will comply with the:
Disability Discrimination Act 1992
Disability (Access to Premises – Buildings) Standards 2010 (Premises Standards)
National Construction Code.
3.21
The ATO have factored in accessibility requirements to its fit-out design to meet legislative requirements. This includes ‘wheelchair access to the building, office areas, lift arrangements, parking and staff amenities’.
3.22
The scope of works for the proposed fit-out at 6 Parramatta Square include the following:
meeting and conference rooms - 46
video conference rooms - 5
utility/storage rooms - 5
break-out/kitchen areas - 6
training and IT training rooms - 7
3.23
The project is due to commence in October 2022, with an estimated completion date of April 2023.
3.24
The ATO did note that the final fit-out design may be ‘adjusted subject to the detailed design process and staff consultation’.
Staff consultation
3.25
The ATO outlined to the Committee that since the announcement of the 6 Parramatta Square site in March 2022 there has been an ongoing engagement process with staff to ensure staff were aware of the planned relocation.
3.26
In late 2021, a Parramatta site working group was established, consisting of representatives from all business areas. These representatives were nominated by senior executives. Regular meetings began in February 2022, with the representatives working closely with the fit-out design team as well as staff from its respective business areas to ensure that requirements and feedback were incorporated into the design. The ATO stated that these meetings ‘provided the basis for broader consultation with staff in the Parramatta site’.
3.27
The ATO told the Committee that a formal staff consultation process was conducted in September and October 2022 to provide staff the opportunity to input into the final design. The consultation process had 22 staff information sessions, with the ATO commenting that after 13 of the sessions 900 staff had provided largely positive feedback.
3.28
In relation to the staffing of the new premises, the ATO reported that staff numbers will remain the same despite the 39 per cent reduction in office space. The proposed fit-out design has a target density of 12m2 of useable office area per work-point. The ATO stated that this will allow them to ‘meet and exceed the occupational density target of 14m2’.
3.29
This proposed density is consistent with new ATO fit-outs from the past several years.
3.30
In the public hearing with Committee, the ATO’s staffing numbers at Parramatta were discussed. The ATO advised that in the post-Covid period the staff attendance rate in Parramatta averages around 40-60 per cent with a 77 per cent peak. The ATO acknowledge that it was ‘quite possible’ that on an average day there would be between 300 to 400 empty desks at the Paramatta Square site, with future workforce growth expected in the future.
3.31
At the public hearing the ATO told the Committee that it would be able to leverage the additional space during surge periods such as tax time. This will mean that the ATO would not have to procure additional lease space to accommodate its workforce. The ATO outlined that on average staff in Parramatta can fluctuate by up to 160 people, or 9 per cent during surge periods.
Engagement with the Australian Services Union
3.32
In its submission and at the public hearing, the Australian Services Union (ASU) raised various concerns regarding how the fit-out of 6 Parramatta Square will meet the needs of staff.
3.33
The key concern raised by the ASU was the ‘inadequate’ consultation process between the ATO, ATO staff and the ASU. The ASU were of the view that the ATO have not met the requirements of its Enterprise Agreement, which requires the ATO to consult staff and their Unions prior to a decision being made regarding obtaining new accommodation.
3.34
The ASU also raised concerns with the proposed useable office area per work-point, stating that it was concerned that no rationale was provided as to why the fit-out design had allocated 12m2 per work-point compared to the Government’s target of 14m2. The ASU was additionally concerned that employees were being unnecessarily ‘crammed’ into the building.
3.35
In response to the ATO’s proposal to utilise hot desking, the ASU stated that:
There has been no survey of the staff to assess their support for this approach. The ASU is aware there are serious misgivings amongst staff about being forced to use hot desking. Under the ATO’s plan, no one will have their own desk, other than the SES based at this office. Staff will be expected to stuff their belongings in a small locker. They will have to find a desk and a locker each day, first in best dressed. Some people are very territorial and expect to use the same desk and locker each day. This can lead to disagreement if someone else claims that desk or locker first. It can be a stressful start to the day.
3.36
The ATO responded to the ASU’s concerns in a supplementary submission which stated that the 6 Parramatta Square project has incorporated similar employee consultation and design processes to previous ATO fit-outs approved by the Committee.
3.37
The ATO also explained that the allocation of 12m2 per work-point and use of hot desking is consistent with other fit-outs they have undertaken, and they consider that these fit-out specifications meet its business needs.
Cost of the works
3.38
The proposed fit-out of the new leased premises has an estimated total cost of $64.38 million, excluding GST. This anticipated cost includes a contingency to mitigate current market pressures.
3.39
The cost per square metre of the project will be $2,569.
3.40
The ATO provided further details on project costings in its confidential submission and during an in-camera hearing.
Revenue
3.41
There will be no direct revenue generated by this project.
Public value
3.42
The ATO stated that the fit-out at 6 Parramatta Square provides public value by ensuring the continuous operation of the ATO in the area in a more
cost-effective manner. The ATO attributed this to the following factors:
delivering value for money
enabling a more efficient use of space and consolidation of staff over a smaller footprint
reducing consumption, leasing costs, maintenance and operating costs, carbon footprint and environmental impacts
providing the contemporary, flexible, and scalable office accommodation to allow for future changes to business requirements and ATO operations
providing a long-term commitment to staff in the Parramatta area
creating anticipated jobs during construction and fit-out works
making use of existing and new public transport facilities.
3.43
The ATO commented that a move to 6 Parramatta Square will help to maintain a strong level of existing capability that will ensure that it can deliver on its Corporate Plan. The move will also assist the ATO to achieve the following aspirations:
build trust and confidence in the tax and superannuation systems
create a streamlined, integrated and data-driven future.
Committee comment
3.44
The Committee considers that the ATO’s proposed project should proceed as it is satisfied with the projects purpose, need, and value for money. Further, the Committee recognises that this project will enable the ATO to continue its critical operations in Parramatta in a more cost-efficient manner.
3.45
The Committee questioned the appropriateness of the size of the overall
fit-out, noting that on an average day there can be a considerable amount of empty desks and unused space. However, the Committee acknowledges that the additional space can be leveraged during surge periods.
3.46
The Committee acknowledges the concerns raised by the ASU in relation to the fit-out, however notes that consultation between the ASU and the ATO is outside of the remit of this Committee. To ensure that the needs of staff are met by the fit-out, the Committee encourages the ATO to consult with the union and maintain an open dialogue throughout the project.
3.47
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 Taxation Office – Proposed Fit-out of New Leased Premises at 6 Parramatta Square.
3.48
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.
Mr Graham Perrett MP
Chair