- Head Office Storage and Logistics Change
Reserve Bank of Australia
4.1The Reserve Bank of Australia (Reserve Bank) seeks approval from the Public Works Committee for the construction of a temporary storage and logistics facility at a leased site.
4.2In 2020, the Reserve Bank received approval from the Public Works Committee for the refurbishment of its Head Office (HO) at 65 Martin Place, Sydney. In 2023, it became apparent that the refurbishment construction could not continue while the Reserve Bank remained onsite due to the identification of a significant amount of asbestos requiring removal. This has resulted in the need for the proposed works for temporary off-site storage.
4.3The estimated cost of delivery of the project is $35.3 million (excluding GST).
4.4The project was referred to the Committee on 1 July 2024.
Conduct of the inquiry
4.5Following referral, the inquiry was published on the Committee’s website.
4.6The Committee received one submission, one confidential submission and one supplementary submission. A list of submissions is in Appendix A.
4.7On 2 August 2024, the Committee received a private briefing, and then conducted a public and in-camera hearing at Australian Parliament House, Canberra. A transcript of the public hearing is available on the Committee’s website.
Need for the works
4.8The Reserve Bank determines and implements monetary policy, fosters financial stability, undertakes a range of activities in financial markets, acts as a banker to the Australian Government, issues Australia’s banknotes and has policy, supervisory and operational roles in the payments system.
4.9In order to facilitate some of these functions, the Reserve Bank requires a storage and logistics facility. The temporary facility will ensure the critical functions of the Reserve Bank are able to continue uninterrupted.
Options considered
4.10Three options were considered:
- Option 1: the reassessment of the feasibility of staying in the existing head office facilities (take no action)
- Option 2: relocating to an existing Reserve Bank site at an interstate location
- Option 3: establishing a temporary facility at an external site in New South Wales.
- Option 1 and Option 2 were disregarded due to business continuity, operational capability, and staff safety risks.
- Option 3 met the Reserve Bank’s objectives around business continuity, operational capability and staff safety.
- The Reserve Bank originally explored using existing Government facilities and requested that the Department of Finance conduct a search. No sites were identified as suitable.
- The Reserve Bank engaged a service provider to investigate options for a leased storage and logistics facility. From a list of over 80 potential sites, a suitable location was identified in the Greater Sydney area. The proposed site supports a fit-out of the appropriate size and functionality that is safe, secure, and flexible on a timeline that will enable delivery of the Reserve Bank’s requirements during the head office asbestos removal and refurbishment.
- At the public hearing, the Reserve Bank provided specific information about Option 3:
The construction is forecast to take around 13 months, including delay contingencies and the testing and commissioning of services. Subject to parliamentary approval, we plan to commence works in mid-2025 and achieve practical completion by mid-2026. This will ensure that these functions can be moved out of head office in a timely and safe manner and not delay construction works at 65 Martin Place. We expect to lease the site for seven years based on expected completion of the 65 Martin Place renovations, with time extension options available.
Scope of the works
4.16The project requires the construction of a bespoke storage and logistics facility, and minor modifications to existing office workspace accommodation. The project will deliver the following custom services:
- bulk storage
- improved security
- altered logistics systems, including in the loading docks
- specialised electrical infrastructure to some spaces within the leased facility
- altered fire safety, air-conditioning, hydraulic, lighting, and mechanical services.
- The existing office space includes most services required, except for some IT and audio-visual requirements.
- Non-construction items include:
- Technology hardware and software to enable the new workspace including wi-fi, meeting room audio visual, telephony and other mobility enabling tools. The estimated cost for technology components is $1.8 million
- Loose furniture and fixtures. An assessment of the existing loose furniture within the current HO building will be undertaken to assess its condition and re-use at the proposed lease site where practical. The estimated cost for loose furniture is insignificant.
Stakeholder consultation
4.19A variety of consultation activities have taken place with affected staff, who have contributed to the fit-out through interviews, workshops and site tours. The Reserve Bank will continue consulting with staff on the impact of the proposed location change to ensure all matters are considered and addressed appropriately.
4.20A Stakeholder Engagement Group representing impacted functional groups within the Reserve Bank will provide feedback on the progress of the design and work to ensure it reflects the best interests of the wider team.
4.21The following external stakeholders have been contacted and/or consulted by the Bank and its consultants during the preparation of this submission:
- the landlord of the proposed site
- appropriate authorities
- a planning consultant.
Cost of the works
4.22The budget is $35.3 million (excluding GST).
4.23The proposed works is part of a larger refurbishment of the Head Office at 65 Martin Place, which received Public Works Committee approval in 2020 for the cost of $259.7 million (later revised to $266.6 million). Since then the Reserve Bank advised the Committee that the cost of the works had increased significantly.
4.24The Committee requested further information about the project and whether any alternative options had been considered. In April 2024, the Committee inspected the Martin Place site and received a detailed briefing from RBA staff and contractors. Following the briefing, the Committee was satisfied that the increase in cost was necessary and represented an effective use of money.
4.25At the public hearing the Committee questioned the Reserve Bank about the cost of the total program of works now exceeding a billion dollars. The Reserve Bank provided further information about the cost effectiveness of the broader refurbishment program:
There was a very rigorous process to analyse the various alternatives, which included selling the building and leasing it back, selling and leasing elsewhere, and selling and purchasing elsewhere, but all the analysis indicated that, in the long run, over a 30-year horizon, it actually was more cost-effective for the bank to keep ownership of the building, complete the renovations and bring it back up to contemporary and safe standards.
Revenue
4.26No revenue will be generated by this project.
Public value
4.27The temporary facility will enable the Bank to meet its legislated obligations and support the economic prosperity and welfare of the Australian people. The site will facilitate resilience and continuity of critical Bank functions.
4.28Public value is also realised by the Bank meeting its policy objectives. Failure to meet these could potentially result in a much higher cost to the public purse than the costs associated with the proposed project.
Committee comment
4.29The Committee did not identify any issues or concerns with the proposal, and it is satisfied that the project has merit in terms of need, scope and cost.
4.30The Committee notes that this additional cost adds to the considerable total created by the decision to proceed with refurbishment of the Bank’s Head Office at Martin Place. While the Committee recognised earlier this year that refurbishment represented value for money compared to the other options, there is a point at which a continued increase in costs will outweigh the benefits of maintaining the Head Office at Martin Place.
4.31The Committee acknowledges that temporary storage in the Greater Sydney Area, as opposed to using the Bank’s other facilities, represents the safest and most secure option given the Bank’s operational needs.
4.32The Committee notes that the proposed seven-year lease contains options for time extensions. The Committee considers this to be essential, given the propensity of the refurbishment project to increase in scope and cost.
4.33Having 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.
4.34The 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: Reserve Bank of Australia – Head Office Storage and Logistics Change.
4.35Proponent 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.