3.1
The Department of Foreign Affairs and Trade (DFAT) seeks approval from the Committee to proceed with the proposed Australian High Commission (AHC) Property Replacement Project, Tarawa, Kiribati.
3.2
The purpose of the project is to provide new fit for purpose office accommodation and residential housing for the AHC Mission in Tarawa.
3.3
The estimated cost of the project is $19.6 million (excluding GST).
3.4
The project was referred to the Committee on 18 September 2019.
Conduct of the inquiry
3.5
Following referral, the inquiry was publicised on the Committee’s website and via media release.
3.6
The Committee received one submission and one confidential submission. A list of submissions can be found at Appendix A.
3.7
On 15 November 2019, the Committee conducted a public and in-camera hearing. A transcript of the public hearing is available on the Committee’s website.
Need for the works
3.8
The project proposes to replace the existing Chancery, Chancery Annex and staff residences at Tarawa
…with purpose built, prefabricated, low maintenance and highly sustainable location appropriate facilities. The proposed investment will address the rapidly deteriorating condition and high maintenance cost of the existing facilities, which are approaching the end of their useful economic life.
3.9
DFAT notes that the current facilities ‘do not meet the requirement to provide reasonable quality and functional working accommodation for all staff and appropriate living quarters’, and the ‘poor condition’ of the properties ‘does not reflect favourably on Australia’s role as a lead partner in the Pacific region’. Australia’s step‐up in engagement with the Pacific was ‘one of the highest priorities of the 2017 Foreign Policy White Paper, launched on 23 November 2017’.
3.10
As DFAT noted at the public hearing, Kiribati has also recently shifted its diplomatic recognition:
…they previously recognised Taiwan, until just recently, in September, they made the decision to recognise China instead. China does not yet have an embassy actually based in Tarawa … So there are just the New Zealand and the Australian high commissions represented there.
3.11
DFAT has difficulty in attracting and retaining Australia based staff (A-based staff) for postings across the Pacific. Tarawa is classified as a Category E hardship post based on its remote location and limited access to amenities and services. As the Department further explained:
…attracting, retaining and supporting staff, through the provision of a high-quality work and living environment, is essential to the government’s broader strategy of building a Pacific region that is securely strategically, stable economically and sovereign politically.
3.12
As to the role of the five A-based and 20 locally engaged staff at the AHC at Tarawa, DFAT noted that the development program with Kiribati formed an important part of that role, as well as promoting Australia’s bilateral relationship with Kiribati through ‘various security initiatives under the Pacific step-up, the Australia Pacific Security College and the Pacific Fusion Centre’. Staff are also assisting Kiribati in preparations to host the Pacific Islands Forum in 2022.
3.13
Overall, DFAT observed that the key issues with the working and residential accommodation were:
Office Accommodation (Chancery). The Chancery is not large enough for existing accommodation requirements and has no room for growth with the current arrangement impractical and not functional; and
Residential Accommodation. There are only three houses available for Mission employees against the requirement for five houses and the current state of the building are not considered fit for purpose. A fourth house, which has been temporarily repaired after extensive termite damage, is currently being used as a Chancery Annex but is located approximately 300 metres from the Chancery.
3.14
DFAT also provided details on the objectives for the project, as follows:
Improved whole of life costs
Options considered
3.15
DFAT considered three options for the project:
Option 2—Refurbish and extend
Option 3—Demolish and construct new
3.16
DFAT considered option 3, demolish and construct new, as representing the best value for money, for the following reasons:
Option 3 achieves the project objectives and provides greater functionality, amenity and operational efficiency than Option 2;
The higher cost of Option 3 is accounted for by the larger building area of the houses, which need to be bigger than the existing houses to achieve the functional objectives, particularly in relation to helping improve staff retention and attraction; and
The Chancery under Option 3 is smaller and more efficient than can be achieved through Option 2.
Scope of the works
3.17
The scope of the project is to deliver the replacement of the following AHC facilities at Tarawa:
Head of Mission (HOM) Residence—4 bedrooms
Deputy Head of Mission (DHOM) Residence—3 bedrooms
Senior Administration Officer (SAO) Residence—3 bedrooms
Second Secretary 1 Residence—3 bedrooms
Second Secretary 2 Residence—3 bedrooms
Chancery (office working accommodation for maximum 31 staff)
All associated demolition, civil and landscaping works
3.18
DFAT noted that the challenges of constructing and maintaining properties in Kiribati and the Pacific are significant, with lack of contractor and construction material availability, high shipping costs and challenging environmental factors contributing to these difficulties.
3.19
Accordingly, the Department explained that it had adopted innovative planning and design concepts for the AHC facilities at Tarawa:
As part of the Project, Reeves International have partnered with the design team, Unitised Building (UB) to develop a flexible façade and structural system that is adaptable to the buildings that will be constructed in this Project.
The UB panel system is a unique system of precision manufactured prefabricated floor, wall and façade panels. Each panel consists of lightweight steel elements encased in a cementitious infill. The panels are designed to lock rapidly together with minimal backpropping to create a building’s superstructure and interface with a building’s chosen façade specifications and bathroom pods.
The UB design solutions include prefabricated bathroom ‘pods’, which will be shipped complete as these elements comprise the most critical construction challenges for finishing trades, waterproofing and plumbing.
3.20
The key features of the UB panel system for the project include: minimal site works; corrosion resistance; termite proofing; maximum floor area space; safe, rapid installation; and maximum design flexibility. DFAT further noted that, with the prefabricated building system at Tarawa, it was seeking to develop a ‘repeatable best-practice design and construction model to fast-track further building programs at other Australian missions throughout the Asia-Pacific region’.
3.21
There was interest at the public hearing in further exploring the extent of deterioration of the existing buildings at Tarawa. DFAT observed that the original buildings were not fit for purpose—from the outset, the buildings ‘were always going to be challenged by the environment and always going to require high levels of maintenance’. These buildings had not been constructed by the Australian Government:
They were purchased in the mid-eighties ... The annex was actually formerly the British high commission residence. They are a traditional build … termites are particularly virulent in the Pacific … which is specifically why we’ve investigated alternative construction methods.
3.22
As to whether the staged build would effect AHC activities, DFAT confirmed that all activities will be maintained—‘we’re able to build the new chancery behind the existing chancery’ and ‘because of the nature of the phasing we’re able to accommodate everyone’.
3.23
Asked whether there might be a need to increase the office or residential accommodation on Tarawa in the future, DFAT responded that, on current forecasts, it did not see that as an immediate requirement—however, given its 25-year outlook in undertaking the project, it is ‘remaining sensitive and flexible to the necessity that may arise at a future point’.
3.24
As part of the project, asbestos cement sheeting will need to be taken off the island for disposal. DFAT confirmed that the contractor will include the ‘Pacific-experienced services of an environmental remediation contractor to undertake assessment and International Asbestos Removals for safe removal’. The contractor has identified facilities in Victoria to receive the asbestos cement sheeting upon receipt of the permit.
Community consultation
3.25
DFAT noted that it had undertaken numerous local stakeholder consultation activities as part of the development of the project. This included meeting with the local government of Kiribati and the Ministry of Infrastructure and Sustainable Energy to discuss the project and brief them on the proposed demolition and construction activities and the necessary approval processes. The project had been ‘well received with no major issues or concerns raised by local stakeholders’.
3.26
In terms of local community benefits, DFAT explained that the project seeks to ‘build local capacity through collaboration with the DFAT funded Kiribati Institute of Technology’. For example, local craftsmen will be employed to construct the maneabas throughout the properties, ‘fostering traditional skills in younger people’.
Cost of the works
3.27
The project has an estimated cost of $19.6 million (excluding GST).
3.28
DFAT provided further details on project costings in its confidential submission and during an in-camera hearing.
3.29
In terms of public value, the project will be delivered in two stages to provide maximum flexibility in the construction methodology and opportunity for innovation to be passed onto the Commonwealth.
3.30
At the public hearing, DFAT emphasised that using prefabricated structures is the most efficient and cost-effective method for staging and sequencing the works:
Improved quality control and significantly reducing waste, transport energy and packaging, as well as time reduced on site, are additional benefits of this approach. The passive design principles adopted and materials selected will promote sustainability and enhance the environmental performance of the buildings.
3.31
In developing the proposal, DFAT further explained that they had ‘worked closely with industry to promote Australian content, expertise, innovation and excellence’, including Australian companies—Reeves International construction group, James Cubitt Architects and Unitised Building.
3.32
DFAT pointed to the high maintenance cost of the existing facilities as being of particular concern, noting that one of the objectives of the project was ‘reduced operating and maintenance costs over an extended building life span (nominally 25 years)’. The Department stated that it was currently spending ‘in the order of about $544,000 in repairs, maintenance and other operating expenses’, to maintain the DFAT owned Tarawa buildings. DFAT projected ‘a whole-of-life costings reduction from $544,000 to around $233,000 going forward’, with energy costs also being reduced ‘in the order of about $77,000 per annum’.
3.33
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.
Committee comment
3.34
The 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.
3.35
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 that is fit for purpose, having regard to the established need.
3.36
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 High Commission Property Replacement Project, Tarawa, Kiribati.
3.37
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.