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Report 2/2019
4. 4. Australian Taxation Office Fit-out of Leased Premises in Moonee Ponds, Victoria
4.1
The Australian Taxation Office (ATO) seeks approval from the Committee to proceed with the Fit-out of leased premises in Moonee Ponds, Victoria.
4.2
The estimated cost of the project is $35.5 million (excluding GST).
4.3
The project was referred to the Committee on 25 October 2018.
4.4
Subject to Parliamentary approval, it is anticipated that construction will commence March 2019 and be completed by February 2020.

Conduct of the inquiry

4.5
Following referral, the inquiry was publicised on the Committee’s website and via media release.
4.6
The Committee received two submissions and one confidential submission. A list of submissions can be found at Appendix A.
4.7
On 7 December 2018, the Committee received a site inspection by presentation. On the same day, the Committee also conducted a public and in camera hearing. A transcript of the public hearing is available on the Committee’s website.

Need for the works

4.8
According to the ATO it has ‘an ongoing requirement for a presence in the North West Melbourne region.’[1] The ATO’s current leased premises in Moonee Ponds is due to expire on 5 February 2020.[2]
4.9
In its submission, the ATO stated that it followed Commonwealth Property Management Framework and Resource Management Guide No. 500 in seeking surplus space suitable for its requirements. The Department of Finance identified no surplus space suitable for these requirements.[3]
4.10
Following an approach to market the ATO has secured 14,000 square metres located over four floors at 6-20 Gladstone Street in Moonee Ponds. According to the ATO it proposes to:
…remain in the current Moonee Ponds site with a reduction in Nett Lettable Area (NLA) of approximately 7,200 square metres. The new agreement for lease is for 14,000 square metres located over four floors from ground to level 3 inclusive. The fit-out works of the floors will coincide with a proposed upgrade of the base building services as they approach the end of their acceptable life cycle.[4]
4.11
The ATO advised that the building was 27 years old, the current fit-out was completed in 2005, and the most recent update to its breakout areas and meeting rooms was completed in 2012 with fit-out and finishes having reached end of life.[5]
4.12
The ATO elaborated on the deficiencies in the existing Moonee Ponds site:
The current fit-out does not provide the ATO with the ability to meet the industry standards or government density benchmarks. The workstations are designed for cathode-ray tube monitors, including the no longer necessary volumes of storage based on older, paper based work processes that are inefficient in their design. They are also designed for single focus work. They do not reflect well the current ATO aims set out in our 2024 plan, including increased collaboration, innovation and providing a more purpose-built environment to support business needs and the professional requirements of staff.[6]

Scope of the works

4.13
The ATO stated that the ‘fit-out will include new work points, upgraded security systems to cater for multi-tenancy occupancy, meeting rooms and general collaboration areas for staff.’[7]
4.14
The ATO submission provided further detail on the proposed scope of works:
The fit-out design is a contemporary open-plan office space with:
Modular work points that can be easily and quickly reconfigured
Collaboration, offices and meeting areas that are flexible and designed for future reconfiguration
A robust security system that protects ATO information, people, other assets and operations
Enhanced conference, training and video conference facilities to support contemporary work practices
New computer room designed to current specifications
First aid room and amenities areas.[8]
4.15
The ATO stated that the proposed works included an increase in the number of bike racks from 80 to 120 and provision of staff lockers used by cyclists and staff undertaking physical exercise (including at local gyms).
4.16
According to the ATO, the landlord for the leased premises in Moonee Ponds will undertake a number of works at their own cost including:
…the refurbishment of the base building services, including but not limited to upgrades to air conditioning systems; lifts; environmental performance of the building; staff amenities, including toilets, showers and change rooms; paint; lighting; blinds; and other protections.[9]
4.17
The ATO noted that the occupational density of the new lease is expected to reduce space by approximately 34 per cent aligning:
…with the changes to [the ATOs] business model over time and also supports the ATO to meet our Commonwealth targets, particularly around occupational density.[10]
4.18
The Committee finds that the proposed scope of works is suitable for the works to meet its purpose.

Cost of the works

4.19
The project has a budget of $35.5 million, excluding GST. The cost estimate includes provision for the office fit-out, cost escalation, contingencies, associated professional fees and the ATO’s internal costs.
4.20
The ATO provided further detail on project costings in its confidential submissions and during one in-camera hearing.

Consultation

4.21
The ATO submission states that it conducted, or intended to conduct, consultations with a number of internal and external stakeholders including:
Department of Finance
Cushman & Wakefield Pty Ltd (Property Leasing, Project Management and Facilities Management)
Peckvonhartel PVH (Interior Designer)
Umow Lai (Services Engineers)
Aquenta (Quantity Surveyors)
McKenzie Group (Building Surveyor)
ATO Executive
ATO business lines
ATO Work Health & Safety
Unions (Community and Public Sector Union and Australian Services Union [ASU])
ATO Workforce Strategy.[11]
4.22
The ASU Taxation Officers’ Branch made a submission on the proposed works stating that ATO staff at Moonee Ponds had not seen the latest concept drawings for the proposed works or the ATO’s submission to the inquiry.[12]
4.23
When asked on whether the ATO had engaged with the ASU, the ATO advised that there had been discussions around the proposed works and that the consultation was ongoing.[13]
4.24
The ATO agreed that further consultation would be part of its next process:
Absolutely. I would just say 'further consultation'. There's been some; there hasn't been none. We've certainly been out and engaged with people about how they work at the moment and what work they're doing. We've done some discussion about how that looks in our other fit-outs. Certainly members of the committee that's already been formed, including the ASU member and the CPSU members, have been invited and indeed have come in and spent time in Docklands to see that environment and see how that is working for people.[14]
4.25
The ATO added that they were confident that they would address all concerns raised by the ASU.[15]

Committee comment

4.26
The Committee understands that the ATO has a long term operational requirement in North West Melbourne. The Committee also accepts that the current facilities are ageing and in need of an upgrade to increase collaboration and innovation and provide staff a purpose-built environment to support business needs and professional requirements.
4.27
The Committee recognises the concerns raised in the ASU submission from staff who will be impacted by the proposed newly designed office fit-out. The impact of proposed public works is always an important facet of the Committee’s scrutiny.
4.28
In any change, especially ones that affect employees, it is vitally important to communicate with staff early and engage with them through the change process. The Committee has observed in other projects that involving staff early in the consultation process enables staff to understand and accept the need for change and alleviate concerns which, in most cases, results in a positive response to the change process.
4.29
The Committee encourages the ATO to continue consulting with staff and stakeholders about changes to their work environment.
4.30
The Committee did not identify any issues of concern with the proposal and is satisfied that the project has merit in terms of need, scope and cost.
4.31
Having 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.

Recommendation 3

4.32
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: proposed fit out of leased premises for the Australian Taxation Office in Moonee Ponds, Victoria.
4.33
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.
Hon Dr John McVeigh MP
Chair

[1]     

Australian Taxation Office, Submission 1, p. 6.

[2]     

Australian Taxation Office, Submission 1, p. 6.

[3]     

Australian Taxation Office, Submission 1, p. 6.

[4]     

Australian Taxation Office, Submission 1, p. 4.

[5]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 3.

[6]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 3.

[7]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 3.

[8]     

Australian Taxation Office, Submission 1, p. 9.

[9]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 3.

[10]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 3.

[11]     

Australian Taxation Office, Submission 1, pp. 7-8.

[12]     

Australian Services Union Taxation Officers’ Branch, Submission 2, p.9.

[13]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 10.

[14]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 10.

[15]     

Mr Andrew Closey, Australian Taxation Office, Transcript of evidence, 7 December 2018, p. 10.