Senator CALVERT (4:19 PM) —On behalf of the Parliamentary Standing Committee on Public Works, I present report No. 7 of 2001 entitled Fit-out of new central office building for the Department of Immigration and Multicultural Affairs at Belconnen, ACT. I seek leave to move a motion in relation to the report.

Leave granted.

Senator CALVERT —I move:

I seek leave to incorporate my tabling statement in Hansard.

Leave granted.

The statement read as follows—

Madam President, this report relates to the fit-out of new central office accommodation for the Department of Immigration and Multicultural Affairs.

The Central Office of the Department of Immigration and Multicultural Affairs has been accommodated in the Benjamin Offices in Belconnen, ACT, since the 1970s. In February 2000 the Commonwealth sold the Benjamin Offices to Benjamin Nominees Pty Ltd, which proposes to redevelop the complex. It is this redevelopment which gives rise to the fit-out proposal.

The need

At the time of sale the Department of Immigration and Multicultural Affairs held two separate leases in the Benjamin Office complex. Benjamin Nominees Pty Ltd advised the Department it would prefer the southern section of the complex be vacated when the lease expired in February 2002. If the Department wished to remain in the complex the rent would be increased to $235 per square metre per annum.

The Department considered this option to be unsatisfactory in view of the building's age-related problems, energy and space utilisation inefficiencies, and high running costs.

As an alternative, Benjamin Nominees Pty Ltd offered the Department of Immigration and Multicultural Affairs the option of moving into a new purpose-built complex on the Benjamin Offices site. Building construction would commence in mid-2001 and be completed in mid-2004. The Department would fund and own the fit-out.

The attractiveness of this option was enhanced considerably by Benjamin Nominees' offer of a $7.75 million cash incentive towards the cost of the fit-out.

Adding to the attractiveness of this option was a rental of less than $280 per square metre per annum. This rental compares favourably with the rates achieved by other government agencies for A-Grade premises in Canberra. A recent comparison indicated a range of between $305-405 per square metre per annum.

A third option considered by the Department of Immigration and Multicultural Affairs was to move to accommodation away from the Benjamin Offices site. This option proved unsatisfactory due to the lack of available properties meeting the Department's needs with regard to timing and space requirements.

Project cost

Madam President I would like to make a few comments about the cost of the project.

The Department of Immigration and Multicultural Affairs has negotiated a Guaranteed Maximum Price for trade works with the project builder for the integrated fit-out of a new commercial building to be constructed on the Benjamin North site.

Any savings realised against the Guaranteed Maximum Price will be shared on a 50:50 basis between the Department of Immigration and Multicultural Affairs and the builder.

The total project cost for the Department of Immigration and Multicultural Affairs fit-out works is $23.97 million. When the fit-out incentive of $7.75 million is brought to account, the net fit-out cost is $16.22 million.

Advantages of New Building Option

The new building option offers a number of advantages in addition to those already mentioned.

A cost benefit analysis prepared by an independent quantity surveyor established that over 13 years, the new building proposal was cost neutral. The additional rental costs of the new building would be offset by ongoing savings for fit-out and maintenance work for the older buildings.

The new building proposal also avoids costs payable if the Department of Immigration and Multicultural Affairs were to take up either of the other two options, for example, the payment of approximately $2 million in “make good” costs when the Department vacates the building.

The new building option also avoids the “dead rent” payable if the Department were to terminate its second lease early, in order to move its Central Office operations to a new site. Knight Frank Price Waterhouse estimated this “dead rent” to be up to $10.7 million.

In addition, the new building development will provide further regeneration of the Belconnen Town Centre, creating short-term employment opportunities as well as boosting economic activity into the future.

Development approval

During the Inquiry the Committee became aware it was examining a proposal to fit-out a building that was yet to receive development approval.

The Committee considers this situation to be less than satisfactory and has therefore recommended that in future, the referring agency obtain all necessary development approvals before referral to the Parliamentary Standing Committee on Public Works.

Disabled access

The Committee considers that every effort must be made to ensure suitable access for disabled staff and visitors to public buildings. The Committee therefore sought advice from the Department of Immigration and Multicultural Affairs regarding the provisions being made for disabled persons in the proposed fit-out.

The Department advised that its builder, through its architect, would provide expert advice on disabled access issues. In addition, an independent quantity surveyor would audit all development design solutions through the construction period against legislative requirements and standards.

Support for the proposed work

The cost and conditions proposed for the new building option make it a highly competitive commercial offer.

The new building will meet the Department of Immigration and Multicultural Affairs' long term accommodation goals. It will deliver a modern A-Grade building complex that is:

· space and energy efficient;

· constructed with awareness of rapidly changing technologies; and

· equipped to meet government environmental targets and contemporary occupational health and safety standards.

The Committee recommends the proposed fit-out of a new Central Office building for the Department of Immigration and Multicultural Affairs at Belconnen, ACT, proceed at a net cost to the Commonwealth of $16.22 million.

I commend the Report to the Senate.

Question resolved in the affirmative.