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Joint Standing Committee on the National Capital and External Territories - 15/02/2013 - Allocation of land to diplomatic missions in the Australian Capital Territory

DONOVAN, Mr Mark, Director, Protection, Privileges and Immunities Section, Protocol Branch, Department of Foreign Affairs and Trade

MANSFIELD, Ms Sally, Branch Head, Protocol Branch, Department of Foreign Affairs and Trade

OUTRAM, Assistant Commissioner Michael, National Manager Protection, Australian Federal Police

PENN, Ms Shelley, Chair, National Capital Authority

RAKE, Mr Gary, Chief Executive, National Capital Authority

Committee met at 09:11

CHAIR ( Senator Pratt ): Good morning and welcome, everybody. It is great to see such strong public interest in our hearings this morning. I ask a committee member to move that the media be allowed to film the proceedings today, in accordance with the rules set down by committees, which include not taking footage or still images of members papers or laptops.

Ms BRODTMANN: I so move.

CHAIR: That is carried. The hearing today is an opportunity for the committee to get input from government agencies and the community on what are complex issues around the allocation of land to diplomatic missions in the ACT.

I welcome witnesses. Although the committee does not require you to give evidence under oath I advise you that these hearings are formal proceedings of the parliament and warrant the same respect as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today attracts parliamentary privilege. I invite you to, if you like, make some opening statements to the committee about the matters before us in our inquiry.

Ms Penn : Madam Chair and committee members, thank you very much for the opportunity to deliver an opening statement on behalf of the National Capital Authority in this inquiry into the allocation of land to diplomatic missions. The NCA is responsible for planning and lease administration in respect of diplomatic land. I wish to speak briefly about the framework the NCA applies in fulfilling its responsibility to provide sites for diplomatic missions.

In outline, our primary focus is on the protection of the national interest. We attend first to drivers, motivations and restraints that relate to the national interest. We then consider drivers and constraints that are relevant to the local interest—that is, those that impact on residents of Canberra. Having evaluated those elements and identified particular precincts or sites that hold the potential for suitability as diplomatic estates, we examine in detail any impacts which would flow from such use, whether they are perceived or actual. Where we find there may be negative impacts, we assess whether they could be minimised or adequately mitigated.

In applying the framework I have outlined, we start by reference to the strategic planning principles as set out in the National Capital Plan. The National Capital Plan guides the development of those areas that provide the special character of the national capital. This involves 'to further develop and enhance a central national area, which includes the Parliamentary Zone in its setting and the main diplomatic sites and national institutions as the heart of the national capital'.

Diplomatic relations are of national significance and our work recognises this function by designating areas in the National Capital Plan for diplomatic activities in Yarralumla, O'Malley and Deakin. We take careful account of advice from the Department of Foreign Affairs and Trade about expected levels of demand for diplomatic sites, Australia's international obligations and foreign policy implications. Noting that the National Capital Plan requires that we start our thinking inside the central national area, we also consider the views and advice of the Department of Foreign Affairs and Trade, the Dean of the Diplomatic Corps and diplomatic missions as to their requirements for land. Examples of these include ease of access to Parliament House and central government agencies, proximity to other diplomatic missions for ease of liaison, visibility in centrally located areas for symbolic and diplomacy reasons, and ease of access for clients to consular services. We also seek and act on advice from security experts on implications for the countries represented in Canberra and their neighbours.

In relation to national constraints we consider a range of elements, such as heritage and environmental impacts. Any significant negative impact on the national interest would result in us discontinuing assessment of a given site at this point. Local constraints at a general assessment level would include such issues as traffic impacts, environment and ascetic matters, for example. Having undertaken this filtering process and having identified specific sites as suitable for more detailed assessment, we undertake a lengthy process of community consultation. Our principal aim in such consultation is to seek out any issues relating to the national interest that we may have missed and to seek out and identify local issues, especially negative impacts that would influence our consideration of the site and/or would require mitigation.

The process described is rigorous and detailed. It is a process of elimination, homing in on sites or precincts that we can confidently say have been well tested and are suitable. While this inquiry is not specifically focused on our recent proposal to use land adjacent to Stirling Ridge for diplomatic missions, it has been the focus of much community and media attention, so I want to mention it briefly in closing. We applied the process that I have just described in our assessment and subsequent selection of a portion of land at Stirling Ridge. We have identified that the nominated land is highly suitable in terms of the national interest. In particular, I want to draw the committee's attention to the fact that, although the vast majority of Stirling Ridge is of very high environmental value, there are no environmental values attached to the subject land, which is located at the fringe of the greater Stirling Ridge area. In relation to local community concerns, including issues such as traffic movements, design, character and the environmental buffers, the NCA is confident that these can be readily addressed through careful planning and approval controls. I trust this background will be helpful to the deliberations of the committee.

CHAIR: Thank you.

Ms Mansfield : Foreign Affairs and Trade has that overarching role in terms of taking a very close interest in our international obligations, particularly under the Vienna Convention on Diplomatic Relations. That stipulates both that the Australian government as the host government to these diplomatic missions must assist them in terms of finding suitable land and that we have an important security responsibility for those missions when they are established in Australia. So our mandate really stems from there.

In terms of the concrete issues, often that does fall to the agency, which is clearly the NCA in terms of the land, and the security agencies on the other issue. But Foreign Affairs and Trade has very much got a role in terms of acting as a hub, a liaison point and as the first point of contact in most cases for diplomatic missions on issues of this nature.

Often what we are doing is balancing a combination of local issues with the bilateral issues that come to us. Those vary enormously, as do the sorts of sizes of the missions. Those are the key areas where we have a role. Sometimes it is a little hard to exactly quantify what it is that we do. It might include, for example, where a mission has a security concern they will often come to me, in the first instance, to raise it because of that Australian government obligation. Then we try to sort it out, step by step.

The diplomatic corps places great importance on having a physical presence. We have seen that by the steady growth of missions coming to Australia. There has also been a steady growth in the number of non-resident accreditations, where ambassadors might be based in Tokyo or Jakarta, where we have had diplomatic relations but there has been no representative assigned. There have been about 12 or 14 over the past two years where those countries have not ever had an ambassador allocated. It is just that general sense of a growing interest in Australia and having stronger bilateral relations.

Sometimes issues such as land become a bilateral irritant. That is another reason they may come to us in the first instance. We certainly work extremely closely though with the NCA and their people and get excellent support from the AFP on all of those security issues. I might leave it there for the moment.

Mr Outram : I would like to put some recent comments onto the public record. The Australian Federal Police welcomes the opportunity by the Joint Standing Committee on the National Capital and External Territories with information relevant to the inquiry into the allocation of land to diplomatic missions to the ACT. The AFP's function is set out in section 8 of the Australian Federal Police Act 1979, which includes the provision of police services in relation to the laws of the Commonwealth, the safeguarding of Commonwealth interests and performing such protective and custodial functions as the minister directs in the gazette.

Under these arrangements, the AFP provides protective security arrangements to foreign government missions, their staff and families, and these obligations also result from the Vienna Convention on Diplomatic Relations, which requires a host country to protect the interests of the sending state. Preventing terrorist attacks and violent protests in Australia and on Australian interests overseas is a high priority for the AFP and its partners. Through its diplomatic protection unit, known as the DPU, the AFP provides high visibility mobile and foot patrols, alarm response and incident response to diplomatic missions in the ACT. In addition, the DPU performs static garden functions at missions and residencies when threat levels become elevated, specific risks are identified or when assistance is requested.

The DPU high visibility patrol vehicles provide a visible deterrent within diplomatic precincts as well as a response platform. The size and proximity of diplomatic premises within the current diplomatic zones enables the AFP to concentrate its patrols on the static guard so as to achieve a force multiplier in terms of deterrence being high visibility prevention, the ability to collect local knowledge and intelligence and response through our communications and close proximity of resources.

The AFP does have some concerns in relation to risks of its resources becoming stretched, if the current arrangements for the location of diplomatic missions are significantly changed. This is because the AFP could lose its current level of preparedness, deterrence prevention and response due to those resources being stretched over greater distances and/or between more areas, and a reduced level of service would result in a commensurate reduction in the level of the protected security provided for the diplomatic community in Canberra.

Senator HUMPHRIES: I want to explore this question of future demand for diplomatic missions with physical presence in the ACT. The point was made that we are growing at approximately the rate of one mission per year, more or less, at the moment but the point is made in other submissions that there is likely to be a tailing-off of that demand for a variety of reasons. Can you give us justification for the need for the number of sites that are presently projected to be reserved, by possible diplomatic missions, by the NCO for the purposes of Australia's diplomatic relations with other countries?

Ms Mansfield : Sure, if you are happy for me to talk about the current demand in terms of the approaches to the Australian government, and I will let the NCA talk about the specifics in terms of blocks. Last year, there were three new missions that established a presence in Canberra and the year before that there were two. I certainly think that over the next couple of years there will continue to be interest, and that may be more than one a year. We have a couple of missions that have at the moment a small what you might call 'post-opening' presence—for example, Kosovo, that arrived last year and would be the fourth if we regard them as having established a presence. Often it takes a country 12 or 18 months to ramp up to the stage where they might be requiring a block of land from the NCA.

The forecast we have for the next couple of years is that there are certainly in the vicinity of seven or eight that have made those sorts of exploratory visits and who have sent an envoy out here to discuss how to go about acquiring land and what is available, and looking at things like costs and exploring the employment of local staff and so on. It is the full suite of issues that you might expect from someone who is going to come to Australia for the first time. The forecast we have is for that sort of ongoing growth. There was a little bit of a hike in the last two years and potentially there will be two or three next year and two or three the year after. Clearly, the number of countries in the world is not necessarily finite—we had a new one last year—but it is not going to go past a certain point.

A number of countries also have a representation in Australia in the form of an honorary consulate. While, for some countries, that continues to be adequate for their needs, there are some that are now looking to move to a more permanent presence. The exact type of land or the exact type of office arrangements they seek will vary from the first couple of years, where they might also start off smallish, getting to know Canberra and getting to know what their own needs will be, before they might come to the National Capital Authority and DFAT and say, 'Okay, we are ready to have land.' Certainly the forecast is for that continued, steady growth.

Senator HUMPHRIES: If we are talking though about generally smaller countries or countries with fairly low levels of trade or other relations with Australia, how likely is it that any of those nations would be able to afford or would need land in an area like Stirling Ridge?

Ms Mansfield : The cost of land is obviously a factor in terms of them working out what they are going to do. Quite often we find that, early on, they might rent office space for 12 months while they work out where they are going to go and what they are going to do. But there is not always a direct correlation between the size of the country and the size of the trade relationship and the nature of the footprint that they want to have in Canberra. Most embassies want some sort of up-front presence. They want to be seen. They want their flagpole up there. I am aware of at least one country that has quite a good block of Canberra land but feels that it does not have the sort of frontage it would like. For example, it has tourists from its country drive by and not be able to see their embassy. I have had comments to me that this mission, for example, would like to move to a block where there is a better, more obvious presence. So it is certainly true that the requirements, and not just the size of the block but where it is, will vary from country to country. It is not necessarily 'one size fits all' and the sorts of discussions that the National Capital Authority has been having with us and missions reflects the different sorts of needs.

Senator HUMPHRIES: Could you name one nation today that you think would be reasonably likely, if blocks were available at Stirling Ridge, to want to take a site?

Ms Mansfield : One of the countries that has recently come here on that sort of setting-up basis is El Salvador. It currently has office space it is renting in Kingston, I think.

Kuwait would probably be interested in a site there as well. There are others who would certainly also regard that site as being excellent for their purposes. Obviously there is a whole pile of other questions, and that is what we are looking into. But, if we went to one of those countries tomorrow and asked, 'Would you like this block?' they would certainly say yes.

Senator HUMPHRIES: And would be able to afford it.

Ms Mansfield : Yes.

Ms BRODTMANN: According to the projections you have made, we are looking at, by 2033, up to 154 countries here, and there are only 195 state and non-state members of the UN at the moment. So we are talking about a huge footprint here. I know that you say that those figures over the past few years have been relatively high. We are just trying to get a realistic assessment of what the demand will be, because the thing is—

Ms Mansfield : I do not think the current higher level of demand—we had two two years ago and three last year, and we might have two or three this year and next year—will continue. I think you are right that that will tail off. The difficulty has been that some of the land that looked like it was available has proven difficult to obtain, for a variety of reasons, and therefore those countries have had to go into temporary arrangements. But I do not expect there to be two or three a year for the next 20 years. I think there is a current hike in interest which will tail off to, maybe, one a year, and I would imagine there will be a point where you will get a lull. That is the reality of it. What we are expected to do as a department of the Commonwealth government is to accommodate reasonably, and there are certainly countries who feel as though they have not been able to start building when they wanted to.

Ms BRODTMANN: You mentioned that people would jump at any opportunity to get some land. Is it because that is the only thing on offer? We tend to provide what I have called in the past the 1950s approach to diplomatic presence, where a large chunk of land in Canberra is the only option. What is your sense on whether people want some flexibility in terms of the offer, whether they necessarily want a four-acre block or—

Ms Mansfield : I think you are right, and there are horses for courses. But that flexibility does exist at the moment. For example, a number of embassies, including those of Argentina and Colombia, are currently using office space. That choice has been available to them. Our concern is often where embassies are planning to rent or buy, because of our other responsibility, security. The NCA has the responsibility for managing those Crown leases, under the set of legal regulations under which we currently operate. So that has naturally been where the embassies will start. There is also the sense that Canberra is a different environment than many other capital cities, and to a certain extent they also take their lead from what other missions have done. There are physical presences that are identifiably the Papua New Guinea High Commission, the Solomon Islands High Commission, the American embassy and the South African Embassy, and the real sense that they have become part of the Canberra landscape. So other missions see that that is how it works here. And we, of course, steer them into discussions with the NCA to explain to them the options under the existing regulations—that is in the set of guidelines that we operate under.

Mr Rake : One thing that has become clear in discussions around the Stirling Ridge proposal is that there is not enough information in the community domain about how we intend to satisfy the full demand that we expect. We think the days of the four-acre block are gone.


Mr Rake : It is not a responsible use of land, and I cannot see that there would be many—if there are any—grants of land that large. Certainly, focusing on Stirling Ridge, there was no proposal for blocks of that size. It is an inefficient use of land. We do have a couple of problems that have come at us over the horizon fairly quickly with land that we thought was suitable now being known to be unsuitable, for a range of environmental and engineering reasons that were not known at the time the land was selected. We have not given up entirely on that land yet; we are going to look for new solutions that might make it suitable for development.

In the suite of responses to demand, we probably do need to put more information into the community about developing new types of properties, whether they are medium or potentially higher density. How do we make better use of existing large sites that are not fully developed? We do still think that there will be a need to develop some new sites; how do we make sure that those, if they go ahead, are efficient and a responsible use of land?

Where we have got land that has previously been unattractive, we may need to repackage it and make sure that we do get people on to it. Most of the problems are, theoretically at least, solvable; there are a couple where we are just not sure if the ground conditions are ever going to be solvable. We may have to abandon some sites. There are some sites—in O'Malley in particular—that could be developed in an engineering sense, but when they were set aside we did not really understand the environmental values of some of the remnant trees. There are some sites in the undeveloped portion of O'Malley that have land that would qualify as yellow box-red gum woodland. We would voluntarily take those sites out; we would not try to ruin that part by developing those. Unfortunately, we will lose a couple of the sites in doing that.

We do need to come forward and tell the community more about how we would deal with, say, an aggregate demand of 40 sites, which might be seven in new development, 12 in medium and high density, and six through subdivision. We do need to do that.

Ms Penn : Can I add that, as Mr Rake said, we are absolutely committed to a diversity of types for diplomatic missions. We think that is appropriate, as it is in the broader community with housing. But just as, in the broader community, there is a cultural shift from lower density in Australia—home ownership with a block of land—there is a threshold in Europe where many people live in apartments and never expect to own their houses. Here, it is a different culture and that cultural issue is relevant, as Ms Mansfield has said, in relation to diplomatic missions where there is an expectation, and I do not think that we can underestimate that. I am not saying that we should not be out there putting forward propositions for alternatives, and lower impact development is something that we are very keen on supporting. It is a matter that gets down to diplomatic relations.

Dr LEIGH: I just want to follow on with that theme. It sounds as though you are arguing that there ought to be good planning principles for Canberra, and that the same sorts of principles that would apply to new development should also apply to selection of new sites for diplomatic missions. Is that right?

Ms Penn : Yes, within the particular context of the needs of diplomatic missions as opposed to the particular context of housing generally.

Dr LEIGH: For example, the GHD report talks about the Curtin horse paddocks as being a potential diplomatic site, and one of the things I am struggling to work out is why the Curtin horse paddocks could be right for new diplomatic estates but are not on a current list for land release for the general public.

Ms Penn : I might ask Mr Rake to answer that.

Mr Rake : Are you asking about general land release for the public for general suburban use?

Dr LEIGH: Yes, exactly.

Mr Rake : There are two elements. We would have to consider the place of Curtin horse paddocks in the national capital framework, in the National Capital Open Space System. It was part of the original geographic separator between South Canberra and Woden/Weston Creek. The development of Deakin West has ruined the first half of that, and if you developed the horse paddocks it would close out the rest of that gap.

There are obviously community sensitivities around it. If it were to be developed for general ACT suburban use, that would be a proposal put by the ACT government and they would need to have that discussion separately with the community about the trade-off of current open space for future urban development. We would have to have the same discussion if we decided that it was suitable for diplomatic use if we wanted to proceed with that. In any part of Australia, any new green field development proposal is going to be controversial. One that deals with such a large area of open space in an older part of the city is going to be at the pointier end of that difficulty.

Dr LEIGH: I agree it is difficult. There is an interesting argument that is made. The Save Stirling Park Group argues that one of the things that potentially skew decision making is that greenfield sites are free to the government and purchasing sites comes off the budget. What did you think conceptually? I would be interested also in Ms Mansfield's suggestion that DFAT effectively ought to have to pay some amount, some value, for a greenfield site.

Mr Rake : We went into our initial assessment of land adjacent to Federal Golf Club, adjacent to the Yarralumla or Old Canberra Brickworks and Stirling Park, without a primary motivation on financial. We went in and assessed the suitability of the site first. The only financial element that came into that evaluation on first cut was site servicing. We then had to apply an overlay of ultimately transactional cost if we had to buy the land or whether we owned the land. The reasons the other two sites were struck out were non-financial in terms of land ownership. Land adjacent to Federal Golf Club was primarily struck out for environmental reasons. Once we removed the areas that were environmentally constrained, it is true that bringing services in for the remaining area make it also economically unviable but it would not have worked as a proposal. It would not have had the sort of connectivity that you need in an estate. At the brickworks the primary blockage at this point is that the land is being actively considered by the ACT government. We are trying, and it is government policy that the NCA work so, to work cooperatively with the ACT government in this shared city and it is not an area that we think we want to start a fight with the ACT government on. If they have active plans on foot and we would have to usurp them in an aggressive way, it is not a space that we are in anymore. If the ACT decided that they thought it were suitable for diplomatic use, we would be very keen to talk and if the Commonwealth had to contemplate buying the land from the ACT we would mount that argument quite happily. But it was struck out because the ACT had alternate ambitions. Stirling Park passed the objective tests: the environmental assessments, the traffic assessments, the ease of bringing in site suitability. Yes, it does have another benefit in that the Commonwealth already owns it but that was not our primary motivation.

Dr LEIGH: But do you think conceptually that can skew decision making? It seems a sensible argument to me.

Mr Rake : If we came down to two sites that were otherwise identical but one was owned by the Commonwealth and one was not, at that point, yes, it would make a difference. As soon as we head into the budget process for the development, we will get strong support for development on the site that has a lower cost and that is a fairly natural decision for any government to make.

Dr LEIGH: I worry that that then takes us away from good planning principles, as Ms Penn said, being the desire to do infill in urban development and the desire to make sure that existing land is best used before you encroach on green space.

Mr Rake : I do not think that is the case because we have made sure that our assessment starts with the planning principles first. So when we think about the Curtin horse paddocks one of the planning barriers down there is that it is a large area that is currently in active community use by albeit, across the population, a small number of people but it is a pretty active use. To develop an estate down there we need to get water, sewerage and power in. It means we would need to exclude people from the vast majority, if not the entire, portion of that site even though our demand is quite slow, so it might develop two sites a year for 20 years but we might have to kick all the horses out on day one. So when we look at that in terms of planning it is a difficult one to stage. If it were a normal suburb you could expect it to be occupied and fully developed over a two- to three-year period.

Ms Penn : There is also, Dr Leigh, a component in that the land that is national land, as opposed to ACT land, has been set aside with planning foresight as land appropriate for national use, so that is also a relevant overlay. As you look at it, you know that, for example, with the vast majority of Stirling Ridge we no longer think that is appropriate for national use and we are wanting to amend that. So that is also in the background about an expected level of appropriateness of national land although, as I have just acknowledged, that is under review and it is under review right now in detail.

Mr Rake : We have had both public statements in some of the submissions you have received and certainly very strong internal messages within government that we should not uplift the development permission over the top of Stirling Ridge because it is Commonwealth owned land and the Commonwealth might want it in the future and we are not to give away the economic benefit. We put the planning principles ahead, and the first of those is environmental; we look at it and we see it is just not sensible so take it out.

Dr LEIGH: You have done the GHD assessment at some possible sites but the Deakin Residents Association argued for a more comprehensive audit. I remember when we had a memorials inquiry we had a suggestion that there ought to be an audit of possible sites for memorials through the ACT. Does that seem like a worthwhile process? Given that breaking up is easier and easier to do for countries and I think the number of countries in the world will steadily increase with low trade barriers, this seems like something we should be planning for.

Mr Rake : I think that is probably what I was getting at earlier in saying that we need to put more information into the public domain. We probably need to say: 'Let's presume two sites a year for 20 years. Let's look for 40 sites. Where would 40 sites be?' That gives us a couple of decades forward plan. Let us look at how that occurs. If ultimately that was something the committee asked us to do, we would do it and I think it is something we probably need to turn our minds to anyway. We have the component pieces but we have never joined them together and said, 'Here's the holistic view.'

CHAIR: Ms Mansfield spoke about missions starting with office space and a private residence that could be anywhere in Canberra. How easy is it for people to get office space in the areas that are within the security footprint?

Ms Mansfield : I honestly do not know the answer to that, except to say that a couple of new missions that have started in the last 12 months that I have had dealings with seem to have found that sort of start-up accommodation relatively easily. I think I mentioned El Salvador was one. I know that Kosovo was looking for temporary office space in the Kingston area or possibly around Braddon. They were looking at those. I do not actually know whether Kosovo has found a suitable site, but certainly El Salvador had the opening of theirs last year and they are happy with that for the moment.

CHAIR: You have outlined that some countries will have a preference for a visible site. Clearly there are also many others that have long-term leases in office buildings that they are quite happy with. What kind of thinking is going on within DFAT and the NCA to make sure that there is a sustainable offering in that regard so the obvious observation that you must have a mission with a flagpole and frontage is not necessarily the first conclusion that people come to?

Ms Mansfield : We are very much guided by the interest of the particular mission that approaches us. Certainly, in terms of ease of getting started, renting a ready-made office space is the way to go but quite quickly that goes down the path of negotiations that then involve the National Capital Authority and discussions of what is available, how much they want, how much rent they are prepared to pay and do they want to make an upfront payment? Some express a clear preference for being in O'Malley and others are interested in Yarralumla. It is partly driven by what is available and what we say to them is an option in terms of the greenfield type land. Those who want a block of land and to develop their own signature embassy or high commission then the NCA is the authority that will be able to provide them with that sort of site. Those are the conditions under which they operate here in Canberra. There is nothing to say that they cannot—

CHAIR: I am slightly confused about what you are saying, Ms Mansfield. It seems like you are arguing that it is always a logical conclusion that people will want to, in the main, move from office accommodation to something with street frontage.

Ms Mansfield : That is not necessarily the case. I think Argentina, for example, has been in Barton for many years and, to my knowledge, has no intention of changing. They are quite happy with that.

CHAIR: Is Barton in the security footprint?

Mr Outram : Yes.

Mr Rake : It is a gap that we have identified in the market. The missions that rent office accommodation at the moment are, with the greatest of respect, nothing more than premium tenants, so they are subject a lot to the views of their landlord. Where we have a gap is we do not have a Commonwealth controlled next step for them to take. So it might be that they quite like the idea of staying in office style accommodation but they—and perhaps even we—would prefer to have the formalities of a Commonwealth controlled agreement that is more tightly bound by international conventions and the parameters of our foreign relationship. We do not have that available, so it is one of the things we have on our list. We need to fill that gap.

CHAIR: I would have thought that for some smaller countries particularly those who are our near neighbours who would really like a strong presence here, that they are not necessarily going to want to build street frontages and that we really do need to work out how to service them. I think that there is a gap in the supply that we need to address, although some of our near neighbours and some of our smaller and less developed neighbours still like the more prominent site. We do see that.

Ms Penn : Part of that is about the visibility of available options as well. Once we get some demonstrated models in place, if you are going to buy a house in the suburbs and you drive around and they are all gorgeous on the street front and there is a little one tucked around the corner that is three levels up and it is the only one that is like that and you want to have a strong presence, you are probably not going to think that is very appealing. If there are a lot of those and they are really good and are patently prestigious and well designed, that is a very important aspect for us for both the greater community and also for the amenity and function of those uses. If you can see that, it is easier to buy. That is why I mean there is an evolutionary step and a cultural shift that we would probably need to make.

Ms BRODTMANN: That is the only thing that is permanently on offer: essentially a rented strata title arrangement and then straight onto the four-acre block, and that is it. The expectation is that that is where they will go because there is nothing else.

Ms Penn : That is why we are interested in developing alternatives. However, I think it is also true—again to the metaphor of housing generally—that we need a mix of housing types. We need a mix of mission types and there will always be those who will require an individual house on a block, and that is fair enough, and there will always be those who are happy to live in a high-rise apartment, and that is fair enough too. We need the gamut.

Dr LEIGH: Mr Rake, are there ways in which the missions can lower their costs?

Mr Rake : There are. At the moment they are still in the theoretical world, we have not had any major practical examples. But there are a couple of ways. Missions can voluntarily agree to reduce the size of their holding so they could negotiate a subdivision. We are actively working on some of those at the moment where the missions have proposed them.

An opportunity that we do not have in our suite at the moment, but we think is relevant is creating a financial incentive for missions who have large undeveloped portions of their blocks particularly in Yarralumla, might involve the Commonwealth buying back a portion of the block. I think that is a perfectly reasonable thing to do. Given that the Commonwealth almost gets something in exchange for a diplomatic land parcel whether it is a land swap elsewhere or whether we sell it or whether we rent it, buying back will not be wasted. The Commonwealth will be able to gain a value when it re-lets it. That is not currently available in government policy but it is a policy we are working on proposing for government and I expect that we will get a pretty favourable response. There are not too many reasons to oppose that.

CHAIR: Do we know what land might become available? Say, for example, blocks on Stirling Ridge, half a dozen subdivisions, an office tower—

Mr Rake : It is always a little bit hard until we actually settle down to site-specifics. We think we could free up potentially half a dozen realisable parcels in Yarralumla alone if missions will learn to come on board. When we sit down and start thinking about how would we value the buyback, we have an established valuation framework for diplomatic land. It is market based and I think that we would use that as the starting point. Then we would look at the market based value of their land and the unexpired portion of their entitlement and it is going to be pretty easy to pop out with a formula at the end that says, 'Here is the parcel. You are giving up half your block of land for half of the term of the lease,' or we could buy it out at a quarter of the value, for example.

Ms BRODTMANN: Ms Penn and Mr Rake, in paragraph 8 you say that there is no extant statement of government policy to guide the NCA in relation to diplomatic land and that administrative arrangements have evolved over time since diplomatic land was first released in Canberra in the 1940s, and what we are seeing now is indicative of that. What are some of the problems created by this ad hoc approach? You mentioned transparency, and I think that is a significant issue we need to address through this inquiry. What are some of the other issues as a result of having this policy gap?

Mr Rake : Government is working towards closing a big chunk of the policy gap there, and that was for clarity around the administrative arrangements on leases—primarily, the price the missions pay. It was criticised quite heavily by the ANAO about four years ago that there was no clear statement of government policy. What it means is there is price disparity. Some missions rent. Some missions pay on an annual basis for 99 years but others pay upfront. Reducing that in economic terms creates an incentive for those who can pay upfront to do so and get a very large advantage. We have recommended a new policy to government that would remove that incentive so it would be a standardised and much fairer system. That work was done in conjunction with the Department of Finance, the Department of Foreign Affairs and the Department of Prime Minister and Cabinet. It is outside the terms of reference of this inquiry but it is quite relevant and we think it is close to resolved. What that means is some missions do not have any longer an incentive in their own right to subdivide. So clarifying that statement and introducing a new policy that that government is willing to negotiate and buy back a portion of land as a clear policy principle would improve arrangements.

Ms BRODTMANN: So that would be clarified in this review?

Mr Rake : The price arrangements will be clarified—

Ms BRODTMANN: Including the subdivision?

Mr Rake : No, not the subdivision; that will have to be a new piece of legislation. It is the sort of thing the committee could turn its mind to as part of this inquiry. The government would need to turn its mind to it as part of a response, and we are preparing advice in parallel.

Ms Penn : But it could flow from this new policy in relation to financial arrangements. So I think the sequence is relevant.

Mr Rake : Yes. Once we have a clear set of financial arrangements across all new leases, we can also say, 'Hang on, let's think about the existing leases. What incentives can we create to get better use of land?' A mission that is renting two per cent of its value per annum, that has already sunk the capital into development, has little ongoing incentive to think about subdivision. But if we were to say we are willing to buy out the remaining portion, that could be very worth while.

Ms BRODTMANN: There has been an evolution of policy over the years, since the forties, but I would like to hear your thoughts on what use it would be if we had a refreshed policy in terms of the management of the diplomatic estate in Canberra.

Mr Rake : It would certainly be easier for us to have discussions with missions about what their future options were if we had a more comprehensive forward plan and were able to say you can start with private office rental and be a premium tenant and then you can transition to a Commonwealth managed style of office accommodation and if the relationship grows and you want to upgrade the premises you can look to stronger, larger and more expensive property. It would be easier for our dealings with those missions. It would be much better for the community to know in the long term what our thinking was, rather than having to respond to individual proposals as they come forward.. I think that is pretty important.

Ms Penn : Plus it would give clarity around government policy in relation to diplomatic relations at the level of diplomatic mission provision. What does government think it should, at minimum, provide? It would be good if that could be codified.

Mr Rake : And purely out of self-interest, the ANAO report four years ago belted the NCA for administering a system that had no clear statement of policy. We had nothing else to work with, but we bore the brunt. We would not have had to wear that.

Ms Penn : Not that we are talking about self-interest!

Mr Rake : No, but it does point to a clear problem.

Dr LEIGH: So we do, as you say, have a system that offers a smorgasbord of pricing options, depending on when you arrive, which does not have the incentives for subdivision. Which country does it best? When we go to other countries, what is the country that get its pricing regime for diplomatic missions right?

Ms Mansfield : The arrangements vary enormously from country to country, as you can imagine.

Dr LEIGH: Who is the best?

Ms Mansfield : I do not think I am the best qualified person to answer that. I would have to take advice from our property people, who deal with those issues. The other thing is that we own property in some places overseas. Where you own a property, you have the same sorts of issues as the landowner—doing your 30-year renovation and those sorts of things—whereas, if you are renting, you deal with the increase in rent every year but you do have the flexibility to change. I do not know whether there is really a country that does its best. Most countries have more open rental or purchase on the private market and the obligation on the host country will be to assist in making it happen. How they do that will vary. There are some that do have estates, in the same way that Canberra has gone. But in most of the capital cities where we have a mission of some sort, either we have had property there for so long that it is almost not an issue now, or it tends to be in cities where we would negotiate with a private landholder, either for renting or purchasing, and then we would seek approval from the host government to locate a mission there.

Dr LEIGH: I do not mean just from Australia's viewpoint; I mean structurally what is the best system? We gained a lot in our memorials inquiry from looking at, for example, how Washington DC had thought about memorials. They had a more rigorous systems than Australia had. Perhaps we could do the same here.

Ms Mansfield : But Canberra is quite a different city in terms of the ACT regulatory guidelines and how you build and the 99-year leases and those sorts of things. So there are some things that I think will always be rather particular to Canberra, and a lot of that has contributed to the quality of life that we have here in Canberra and the sorts of things that I know the NCA is very concerned about in terms of broader planning. If you are comparing what we do in Canberra with what is done in London, it will be very different. If you are looking for a comparison, it could be Brasilia. But I will talk to our property people come back to you with a sense of how they processes differ. A lot of it will go back to historic reasons—we have had a property for a zillion years and therefore there have not been any issues—or areas where there are particular security problems. For example, in Baghdad there are one-off issues that we are considering.

Dr LEIGH: But let us not just look at it from an Australian perspective; let us look at the system.

Ms Mansfield : Yes.

CHAIR: I am not sure how many sites are envisaged at Stirling Ridge.

Mr Rake : It would really be a minimum of five and a maximum of nine. The biggest determinant there is how we structure the traffic arrangements.

CHAIR: With demand of, say, 40 blocks over 20 years, clearly some of it will have to come from subdivisions—and that is clearly the kind of plan you have got there—and some of it will have to come through more suitable office accommodation that might better suit people's needs. Is it possible that something like Stirling Ridge can sit there and not get filled up all that quickly as a result of that?

Mr Rake : It would depend on the speed at which we are able to free it up. If you think about the demand, it would be someone who wanted a stand-alone site. The alternative option for them would be a subdivision. If we could find five other sites to subdivide in Yarralumla fairly quickly, that could soak up the demand that would otherwise have gone to Stirling Ridge. So, in theory, it could sit a bit longer; but, on the complexities of those negotiations, I cannot predict how successful we would be until we got into them. In trying to satisfy a demand of 40, I think it is reasonable to expect us to try to satisfy half of that from our existing supply, to try to find ways to get that out and get that development up and running. We could probably break the rest of it into half new sites and half infilling through subdivision.

Senator HUMPHRIES: I want to ask the Federal Police whether new technology is going to present opportunities to better manage a dispersed diplomatic estate. For example, I get the impression that cameras are not extensively used at the moment. Would cameras make it easier to manage an estate where there were more-far-flung sites?

Mr Outram : That is a good question. It is not a panacea. The issue is that, the more cameras you have, the more television screens you have got and the more information you have got coming in digitally. When you go through what we are talking about in terms of, firstly, deterrence, television cameras can provide some deterrence, and most embassies would have their own CCTV on their perimeter fences and walls anyway. From a law enforcement point of view, the visibility of the red car and the officer in uniform provides a deterrent. The second thing, as I have mentioned in discussions, is that our officers who patrol in these areas get to know the activity and the patterns of behaviour of local residents, gardeners and people coming and going and the general feel and mood of the place. They pick up information that way. Technology does not give you that human interface. From a security point of view, I think the human interface is really important. Also, in terms of relationships with the security officers, the embassy staff and those sorts of things, you would not get that from technology either. So technology is a good aid in terms of security but it is not a panacea. When you get an alarm going off a long distance away, you have still got to respond to it. In fact, with some of the places that we look after, sometimes you get an alarm system go in that has various bits of technology and you get a lot of false positives. So you do create a great demand for your people to respond to technology which is actually triggering an alarm because of a bird or something. In other words, technology is not a panacea.

Mr Rake : Quite often those measures attract criticism from nearby neighbours too, particularly if there is one property in a precinct of standard suburban residential homes. It is not just about the addition of cameras; there are also very secure fences and lights. If they are the only neighbour and have purchased in the area and come in under a deregulated system, the surrounding neighbours have no way of knowing that their very immediate next-door neighbour will suddenly wake up six foot barbed wire fences and lights and cameras.

CHAIR: I want to ask you about diplomatic missions in residential areas and the extent to which there could be further consolidation of making that a more explicit policy. I know that has some issues attached to it also. Could you comment on that?

Mr Rake : Probably the most complex issue is land tenure. At the moment the vast majority of our suburbs are territory land and they are administered by the ACT government under its laws. For the Commonwealth to be able to adequately control it, we would be to designate that land as national land and we would need to have our planning rules apply. That requires changes to statutory instruments in both governments. If we were to allow missions to choose where they went throughout the suburbs and we wanted that level—

CHAIR: I am not saying that. I am talking about consolidating in existing diplomatic areas where there are residential areas already.

Mr Rake : Buying out residents would be a policy option for government to enter the market and buy existing properties in those areas.

Ms Mansfield : In O'Malley, for example, while there are some areas that are specifically designated as diplomatic land there are a number of houses that have been either rented or bought. Some of them are used as residences for the heads of mission but others are being used as office space. The other thing is that those missions sometimes make quite a considerable investment in terms of security, communications dishes and whatnot, so they may become quite entrenched and be very happy to stay there rather than having to up sticks and do it all somewhere else. Because people might not want their neighbour to have that many satellite dishes, it has made sense to consolidate those in that part of O'Malley that has been allocated as a sort of a temporary diplomatic zone.

Mr Rake : The sorts of lease administration issues I have just set out still apply on consolidation. If you were to do it in an unemotional, cold-hearted way, you would designate an entire block of a suburb as being for diplomatic use over the next hundred years. You would change the land tenure of the entire block from territory to national, regardless of the current use. But that is pretty unsympathetic to the residents who live there, some of whom may plan for their family to stay there 100 years. It really starts to look like a forced acquisition.

Proceedings suspended from 10:09 to 10:23