3.1
The Australian Taxation Office (ATO) seeks approval from the Committee to proceed with the proposed integrated fit-out of new leased premises at 255 George Street, Sydney CBD, NSW. The aim of the project is to ensure alignment with the ATO Location Strategy, maintain a skilled workforce in the Sydney CBD, meet Commonwealth occupation density targets and support organisational agility and flexibility to meet the needs of Government in delivering essential services.
3.2
The estimated cost of the project is $46.32 million (excluding GST).
3.3
The project was referred to the Committee on 16 December 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 one submission and one confidential submission. A list of submissions can be found at Appendix A.
3.6
On 28 February 2022, the Committee conducted a project briefing, and public and in-camera hearings via teleconference. 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 the Sydney area; one at Goulburn Street; one in Penrith; and one in Parramatta. This proposal seeks to relocate the staff currently located at Goulburn Street to a new leased premises at 255 George Street, Sydney.
3.8
The ATO moved into the existing Goulburn Street site in 2007 and leases 22,931 square metres of office space.
3.9
The ATO stated in its submission that the Goulburn Street site has an expected fit-out life of 10 years, and while a number of improvement works have been carried out in that time, ‘further improvement works to prolong the usable life of the site are not considered to be good value for money.’
3.10
At the public hearing the ATO told the Committee that a key driver of the ATO’s approach to the market for a new leased accommodation was that the ‘ATO’s current accommodation exceeds the government’s target for occupational density.’
3.11
The proposed relocation from Goulburn Street to 255 George Street will allow the ATO to achieve a reduction in its Net Lettable Area (NLA) of ‘approximately 9,700 square metres, being a reduction of 42.61% compared with the existing lease.’
Options considered
3.12
The ATO stated in its submission that it had consulted with a Strategic Property Adviser (SPA), the Department of Finance, and Colliers - one of the ATO’s contracted Property Services Advisers - to consider options available to the ATO following the Sydney lease expiry.
3.13
The ATO told the Committee that ‘no surplus Commonwealth office space that would meet the ATO’s requirement was identified during this process.’
3.14
Other options considered by the ATO were discussed during the in-camera hearing and further information was provided to the Committee in response to questions taken on notice.
Scope of the works
3.15
At the public hearing the ATO told the Committee that:
The building [at 255 George Street, Sydney] is an existing 29-level commercial tower, and the ATO proposal is to fit-out nine floors. The new lease delivers cost savings, with a reduction in net lettable area of almost 10,000 square metres or 42.6 per cent when compared with the ATO's existing lease. The proposed fit-out will meet the Department of Finance occupational density target.
3.16
The ATO states in its submission that the fit-out is designed to accommodate the existing ATO staff numbers located in the Sydney CBD at a proposed one-to-one desk ratio.
3.17
The project will also include ‘specialised facilities’ to support staff, including:
…an IT forensic laboratory, installation of internal circular stairs focused on staff wellbeing and collaboration, additional security enhancements that support a multitenanted building and future reconfiguration, and a backup generator to support critical business continuity.
3.18
The scope of the work includes:
Contemporary, ‘Grade A’ office accommodation which meets government occupational density targets and offers large and efficient floor plates to maximise space and flexibility
An adaptable work environment to cope with ongoing changes in ATO’s business operations and technology
Offices and meeting areas that are flexible and designed for future reconfiguration
Lockers for staff to store equipment, reference material and personal effects
Enhanced conference, training, and video conference facilities
A robust security system that protects ATO information, people, and assets
IT infrastructure which will support the needs of the site
First aid room and amenities areas.
3.19
In its submission, the ATO stated that all toilet facilities and common areas are excluded from the proposed scope as these areas will be upgraded by the building owner at no cost to the ATO.
3.20
The ATO provided further details on the project scope in its confidential submission to the Committee.
Staff consultation
3.21
The ATO stated that the project ‘imposes no change to the jobs or functions undertaken by staff in the Sydney CBD’.
3.22
The ATO told the Committee that it has a planned engagement process that will run throughout the project and ‘will provide an opportunity for business and staff to provide input into the design, or raise concerns relating to the proposed works.’
3.23
The ATO noted that it plans to establish a site working group to share information between staff and the project team. The working group will be comprised of nominated business line representatives, site leaders, site executives, union representatives and other specialty group representatives (e.g. work health and safety, environmental team, and fire wardens).
3.24
In response to questions from the Committee about the opportunities for ATO staff to work from home in the future, the ATO stated:
We expect to see take-up of hybrid working in the ATO, and the ATO has announced that it intends to support hybrid working, but there's still an expectation that staff attend the office as part of those hybrid working arrangements. Staff have access to up to two days working from home, but we still expect all staff to be coming into the office across a week.
3.25
The ATO stated that it had engaged extensively with staff regarding the proposed relocation.
3.26
The ATO told the Committee that:
To date, we haven't had any issues raised that are of any concern. We've certainly heard feedback that's in line with the type of feedback we hear when staff are undergoing any change process, particularly a potential accommodation change process.
Public value
3.27
The ATO stated in its submission that the project at 255 George Street would benefit the local community as it:
Is the most cost-effective option for the Commonwealth;
Enables a more efficient use of space and consolidation of staff over a smaller footprint;
Will provide the ATO with contemporary and flexible office accommodation;
Provides a long-term commitment to staff in the Sydney CBD;
Creates jobs during construction and fit-out works; and
Makes use of existing public transport facilities.
Cost of the works
3.28
The Australian Taxation Office - Proposed Fit-out of New Leased Premises at 255 George Street, Sydney CBD, NSW has an estimated cost of $46,324,603, exclusive of GST.
3.29
The ATO provided further details on project costings in its confidential submission and during an in-camera hearing.
3.30
The Committee was pleased to hear that the ATO will fund the fit-out from ‘within existing departmental funds’.
3.31
At the public hearing, the ATO told the Committee that:
Due to the uncertainty around market supply and COVID-19 factors, the project has been allocated a high level of contingency. The ATO has a very strong record of generally not needing to spend contingencies allocated to projects. The construction cost without contingency, while above the Public Works Committee range, compares favourably against government fit-outs in the Sydney market and reflects the uplift in cost already driven by market supply and COVID-19 factors.
3.32
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.
Revenue
3.33
There will be no direct revenue generated by the project.
Committee comment
3.34
In relation to the staff consultation process, the Committee heard that ATO business areas would be given the opportunity to feed into the design for its workforce based on its specific needs. The Committee encourages the ATO to continue to engage openly with staff throughout the project to ensure that staff are adequately informed and accommodated.
3.35
The process and criteria used by the ATO to select the 255 George Street site for the works was not clear to the Committee and highlighted a number of concerns. This is outside the remit of the Committee’s scrutiny. The Committee considers the process to be of sufficient concern that it recommends the Australian National Audit Office consider investigating the process of site selection at 255 George Street.
3.36
The Committee recommends that the Auditor-General considers conducting an audit into the process undertaken by the Australian Taxation Office in identifying and selecting 255 George Street as the preferred site for the works.
3.37
Having regard to its role and responsibilities contained in the Public Works Committee Act 1969, the Committee is of the view that this project is fit for purpose having regard to the established need.
3.38
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 255 George Street, Sydney CBD, NSW.
3.39
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.