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Foreign Affairs, Defence and Trade Legislation Committee
30/05/2018
Estimates
DEFENCE PORTFOLIO
Defence Housing Australia

Defence Housing Australia

[16:37]

CHAIR: I now welcome Ms Jan Mason, Managing Director, and officers from Defence Housing Australia. Minister, would you like to make an opening statement?

Senator Payne: No, thank you, Madam Chair.

CHAIR: Ms Mason, would you like to make an opening statement?

Ms Mason : No, thank you, Chair.

CHAIR: In that case, I'll go to Senator Gallacher.

Senator GALLACHER: I was recently in Western Australia but was unable to take up the invitation to visit Seaward Village to see the progress on the refurbishment of that asset, so can you perhaps update the committee on what progress has been made there. How much has been completed?

Ms Mason : We certainly can, Senator. I'll ask Mr Jorgensen to assist you with that. It's a shame you couldn't attend, but Mr Jorgensen can give you some information.

Mr Jorgensen : With the Seaward Village project, we have 153 properties broken up into three phases. The first phase includes 58 properties being upgraded. They're almost complete, with the last of those properties due to be completed in June. We already have approximately 42 of those completed. In April we undertook an open day with the residents of Seaward Village and also had a look at a number of the properties, and the feedback on the quality of the upgrade so far has been very good.

Senator GALLACHER: What was the value of the 58 properties that have been upgraded?

Mr Jorgensen : The contracts for that phase are broken into two packages: package 1 of 42 properties, with a contract value of $8.29 million, and package 2 of 16 properties, with a contract price of $3.5 million. What we're finding is the average price is coming in under $190,000 each, which is well under the PWC approval for the project.

Senator GALLACHER: Do you do a post-implementation report? Do you feed that back into the Public Works Committee when you're finished?

Mr Jorgensen : Yes, that's right. We are required to update the PWC periodically across the project. I think we're in the process of preparing the first update.

Senator GALLACHER: Did you show Mr Goodenough and Mr Smith around recently? Was that you? There was an open invitation at the end of another inspection to go and look at that. I wasn't able to do it.

Mr Jorgensen : Yes, our regional director in Perth undertook that visit.

Senator GALLACHER: They inspected the completed properties?

Mr Jorgensen : That's right, yes.

Senator GALLACHER: How much is it coming in under budget?

Mr Jorgensen : I've got the budget here. The budget for the first phase was $15.79 million.

Senator GALLACHER: And you've spent $11 million, 12 million—$11.7 million?

Mr Jorgensen : $11.8 million.

Senator GALLACHER: It's significantly under budget. Is that because trade prices are down or the building industry is down? Is it just taking advantage of repeat work?

Ms Mason : I think it's a combination. When we go to tender, the competitive forces sometimes deliver a result which is inside the estimate. Also, we do have contingencies in our estimates to take account of unforeseen factors or unknown factors such as the impact of weather.

Senator GALLACHER: Very good.

Ms Mason : I think we've reported to a previous estimates hearing that, should there be savings in the project, both Defence and DHA would benefit from those savings in equal measure.

Senator GALLACHER: Are there any other on-base projects that are underway at the moment around the network?

Mr Jorgensen : We recently completed the delivery of 80 properties at RAAF Base Darwin. That would be the other major project that's underway—or just completed.

Senator GALLACHER: They're in The Narrows, aren't they? There was a lot of flood mitigation work in that area. It's called The Narrows because it floods! All those houses have been completed now, have they?

Mr Jorgensen : Yes, that's right. There were 80 properties that DHA constructed. There was substantial work done in the area to manage floodwaters and remove water off the site. The NT government did do quite substantial work in the corner of that site near where the 80 properties are.

Senator GALLACHER: Right. If you ever visit the Territory in the wet season, it's not unknown for that section of Bagot Road to be under water. Your development isn't contributing to that? That's all been alleviated? The flood mitigation strategy is a combination of the Territory's and your responsibility.

Mr Jorgensen : Yes. Quite substantial work was done to make sure that the water moves away from that site as best it can. It involved quite a bit of work from the NT government right on the boundary between the residential area outside of the base boundary and the area where the 80 houses have been produced.

Senator GALLACHER: Let's hope it's successful, because where you've built is not the area where all the houses used to be; they were on the higher ground.

Mr Jorgensen : Yes.

Senator GALLACHER: Fingers crossed that that comes out okay. Is that the only other major on-base project that you have in the pipeline?

Mr Jorgensen : I think they're the only two major ones we've got at the moment. RAAF Base Tindal—we did complete some works there, but that's some time ago now.

Senator GALLACHER: Yes. The only stuff that would go through the Public Works Committee now would be major on-base work. Is that correct?

Mr Jorgensen : That's right; any on-base works or major works where Defence is funding a substantial part of the works.

Senator GALLACHER: I don't have any other questions.

CHAIR: Thank you. Any other questions? Senator Moore.

Senator MOORE: I just want an update on the situation with the Toowoomba purchase of the land and what's happening in that space. I know there's been extensive community consultation up there, and I'm just wanting to get an update on record about where that stands—a Mount Lofty property.

Mr Jorgensen : Senator, I can give you an update on that project. The project is progressing well since our last update at Senate estimates. The major work has been done in developing the draft master plan and a draft development application to go to the local council. Most recently, we had a community reference group meeting on 23 May 2018 and we followed that up with a community open day on 26 May.

Feedback has been quite positive from both the community reference group and the open day. A lot of the items that the community has raised previously appeared to have been dealt with reasonably well in the draft master plan. The next stage is to submit the draft master plan in June with the local council and, from that process, the council will have a number of questions and information that they will seek from Defence Housing Australia on the site. Later in the process there'll be further community consultation associated with the seeking approval for the development application.

Senator MOORE: So, in the draft master plan, what is the number of units that are being proposed for construction?

Mr Jorgensen : The whole site is 379 hectares. The master plan is looking to develop on about 55 hectares of the total site, and we're looking at this stage to deliver about 344 lots across the 55 hectares. Across the master plan—

Senator MOORE: Multidesign—so you've got—

Mr Jorgensen : Varying sizes across that site.

Senator MOORE: Which is considerably fewer than the original—one of the concerns raised earlier was a much larger amount of construction.

Ms Mason : I think there was some speculation in the media which wasn't well founded and it was well in advance of our planning processes—and I think we did cover at estimates at the time that we were at the early stages of planning and we had intended to speak with the community and think very carefully about the site.

Senator MOORE: One of the things we discussed here—and in the briefings; thank you very much—was roads and access in that region, which is not yours; it's a council proposal. So, there cannot be more work done on that and discussion until the plan's submitted to council? Because it's definitively a council issue in terms of road access and volume.

Ms Mason : I'm sure there'll be further discussion about roads, but the traffic studies that we did showed that there was a need for an upgrade of the roads regardless of the DHA project.

Senator MOORE: Absolutely.

Ms Mason : I'm sure there'll be further focus on that issue.

Senator MOORE: I think that was the core issue: it already needed a new extension. What's the current time frame? Going to June, you're going to the council and then they start their processes. At this stage, what is DHA hopefully moving towards?

Mr Jorgensen : The development application goes in in the second quarter of 2018. The process does take quite some time as the council goes through and seeks information and questions from DHA. We're looking at a public notification period somewhere towards quarter 4 for 2018, so towards the end of financial year 2017-18 we're hopeful of some advice.

Senator MOORE: And the consultative forum is still the same make-up as it was when it was set up—there have been no changes to that?

Mr Jorgensen : That's correct.

Senator MOORE: And the last point: how often does the consultative forum meet?

Mr Jorgensen : I think they've met three times so for. We continue to meet on significant points in time.

Senator MOORE: And this is being handled out of Brisbane?

Mr Jorgensen : Yes, we have a project manager who works in our Brisbane office but spends quite a bit of time at the Toowoomba site.

Senator MOORE: He's very fortunate. Thank you very much.

CHAIR: Are there any more questions? Senator Gallacher.

Senator GALLACHER: In relation to your board appointments, are they three-year terms?

Ms Mason : I'll ask Mr Jordan, our general manager of governance, to come forward and deal with answers to questions on the board, but, generally speaking, the appointments to the board would be for three-year terms. Sometimes those appointments are extended, but they are normally three-year terms. I think there have been a few exceptions.

Senator GALLACHER: I suppose my question is: is it a three-year term?

Mr Jordan : It is usually a three-year term, yes.

Senator GALLACHER: What is the governance rule? Is it for three or five, or is it up to the discretion of the ministers?

Mr Jordan : It is up to the discretion of the minister, but there is some guidance in resource management guide 126, which is colloquially known as the GBE guidelines, saying that the usual term is three years, but it is at the discretion of the minister, ultimately.

Senator GALLACHER: I'm just trying to get a picture of that. So it's three years, but it may be that they make it two years to co-align something, or do they make it four years?

Mr Jordan : In my time at DHA, I don't think a board member has been appointed for four years. The usual is three.

Senator GALLACHER: What would be the strategy in respect of appointments? Is it just as vacancies arise? There's no protocol about aligning expertise; it's just that, as someone resigns, someone else comes on and everybody has a rolling end date?

Ms Mason : As terms expire, there's a process that's gone through that I don't think has really changed over successive governments, and possibly the Department of Finance may be a better department to speak with about that. Although it does involve input from the chair of a GBE, where they would make suggestions or recommendations, normally the portfolio department and the Department of Finance would provide some advice, the government would consider it and shareholder ministers would make appointments as they see fit.

Senator GALLACHER: I just note that a number of appointments have been made in 2016 and there are other appointments for 2017 and 2018. But they're all for three years, basically?

Ms Mason : Yes. As the appointments expire at different times, the further appointments—whether it's an extension of an existing board member or the appointment of a new one—can happen at differing times. In fact, that can be desirable so that you don't have all members of a board ceasing at the same time and you have some continuity and overlap between board members and assistance with the induction of new ones.

Senator GALLACHER: That makes perfect sense. There are no examples of people being reappointed before the expiration of their term?

Mr Jordan : Not to my knowledge, no, but obviously they're reappointed before their current term expires to provide continuity.

Senator GALLACHER: Normally in governance, is that a month or two months before?

Mr Jordan : There are no guidelines on that, but practice seems to be about a week to a couple of days.

Senator GALLACHER: Thank you very much.

CHAIR: Thank you very much for appearing here today. That concludes the committee's examination of Defence Housing Australia. I thank Ms Mason and the officers for their attendance here today.