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Public Works—Parliamentary Standing Committee—5th report of 2020—Referral made May 2020


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PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

Report 5/2020

Referral made in May 2020

Parliamentary Standing Committee on Public Works

© Commonwealth of Australia

ISBN 978-1-76092-142-2 (Printed Version)

ISBN 978-1-76092-143-9 (HTML Version)

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

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Contents

Members ............................................................................................................................................. v

List of Recommendations ............................................................................................................... vii

The Report

1 Introduction .............................................................................................................. 1

2 Department of Agriculture, Water and the Environment Proposed Fitout of New Leased Premises Canberra ....................................................................... 3

Appendix A. List of Submissions .................................................................................. 15

Appendix B. List of Public Hearings and Witnesses ................................................. 17

v

Members

Chair The Hon Dr John McVeigh MP

Deputy Chair Mr Tony Zappia MP

Members Ms Lisa Chesters MP

Senator Alex Gallacher

Senator Hollie Hughes

The Hon Barnaby Joyce MP

Senator Susan McDonald

Mr David Smith MP

Mr Rick Wilson MP

vi

Committee Secretariat

Committee Secretary Pauline Cullen

Inquiry Secretary Klara Fay

Office Manager Tanya Pratt

vii

List of Recommendations

Recommendation 1

2.50 The Committee recommends that Department of Agriculture, Water and the Environment report back to the Public Works Committee with six monthly written updates until the completion of the works.

Recommendation 2

2.53 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: Department of Agriculture, Water and the Environment Proposed Fitout of New Leased Premises at Block 34, Section 26, Canberra City, ACT.

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1. Introduction

1.1 Under the Public Works Committee Act 1969 (the Act), the Parliamentary Standing Committee on Public Works is required to inquire into and report on public works referred to it through either house of Parliament. Referrals are made pursuant to Section 18 of the Act, and by practice are made by the Minister for Finance or their delegate in the House of Representatives or the Senate.

1.2 All public works that have an estimated cost exceeding $15 million1 must be referred to the Committee and cannot be commenced until the Committee has made its report to Parliament and the House of Representatives receives that report and resolves that it is expedient to carry out the work.2

1.3 Under section 5 of the Act, a public work is a work proposed to be undertaken by the Commonwealth, or on behalf of the Commonwealth concerning:

 the construction, alteration, repair, refurbishment or fitting-out of buildings and other structures;

1 The threshold amount for a public work for Defence purposes is $75 million as per Public Works

Committee Regulation 2016, Part II, Section 7(a).

2 The Act, Part III, Section 18(8). Exemptions from this requirement are provided for work of an

urgent nature, defence work contrary to the public interest, repetitive work and work by prescribed authorities listed in the Regulations.

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 the installation, alteration or repair of plant and equipment designed to be used in, or in relation to, the provision of services for buildings and other structures;

 the undertaking, construction, alteration or repair of landscaping and earthworks (whether or not in relation to buildings and other structures);

 the demolition, destruction, dismantling or removal of buildings, plant and equipment, earthworks, and other structures;  the clearing of land and the development of land for use as urban land or otherwise; and  any other matter declared by the regulations to be a work.

1.4 Section 17 of the Act requires that the Committee consider and report on:

 the purpose of the work and its suitability for that purpose;  the need for, or the advisability of, carrying out the work;  whether the money to be expended on the work is being spent in the most cost effective manner;

 the amount of revenue the work will generate for the Commonwealth, if that is its purpose; and  the present and prospective public value of the work.

1.5 The Committee pays attention to the above matters and any other relevant factors when considering the proposed work.

Structure of the report

1.6 In considering the works, the Committee analysed the evidence presented by the proponent agencies, including submissions and evidence received at public and in-camera hearings.

1.7 In consideration of the need to report expeditiously as required by Section 17(1) of the Act, the Committee has only reported on significant issues of interest or concern.

1.8 Chapter 2 addresses the proposed Department of Agriculture, Water and the Environment, Fitout of New Leased Premises Canberra. The estimated cost of this project is $78.0 million (excluding GST).

1.9 Submissions for the project are listed at Appendix A, and hearings and witnesses are listed at Appendix B.

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2. Department of Agriculture, Water and the Environment Proposed Fitout of New Leased Premises Canberra

2.1 The Department of Agriculture, Water and the Environment (the Department) seeks approval from the Committee to proceed with the proposed Fitout of New Leased Premises Canberra. The aim of the project is to ‘relocate AWE’s civic operations to a new building fitted out to the Department’s new workplace objectives’.1 In addition, the project will ‘provide the Department with a greater degree of flexibility to accommodate staff number fluctuations and re-organisation’2, as was seen by the December 2019 machinery of government (MOG) changes that consolidated the Department of Agriculture and the environment functions from the Department of the Environment and Energy.3

2.2 The estimated cost of the project is $78.0 million (excluding GST).

2.3 The project was referred to the Committee on 15 May 2020.

1 Department of Agriculture, Water and the Environment, Submission 1, p. 6.

2 Department of Agriculture, Water and the Environment, Submission 1, p. 6.

3The Hon. Scott Morrison MP, Prime Minister - Minister for the Public Service, ‘New Structure of

Government Departments’, Media Release, 5 December 2019.

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Conduct of the inquiry

2.4 Following referral, the inquiry was publicised on the Committee’s website and via media release.

2.5 The Committee received two submissions and one confidential submission. A list of submissions can be found at Appendix A.

2.6 On 2 July 2020, the Committee conducted a project briefing, public and in-camera hearing via teleconference. A transcript of the public hearing is available on the Committee’s website.

2.7 On 28 August 2020, the Committee conducted a site inspection of the Department’s current Canberra office accommodation.

Need for the works

2.8 The Department of Agriculture, Water and the Environment (the Department) is a ‘diverse and far reaching government department’, with responsibility for delivering policies and programs that protect Australia’s natural resources, develop strong agricultural industries, and ensure the good management of Australia’s land and water resources.4

2.9 Currently the Department’s Head Office accommodation is spread across two adjacent buildings within Canberra city, and a short term lease in the nearby suburb of Braddon.5 The location and size of the leases is outlined below:

Table 2.1 Current AWE Head Office Accommodation

Location Occupied space (m2) Lease expiry

18 Marcus Clarke Street 27,118 8/10/2022

7 London Circuit Street 8,887 8/10/2022

44 Mort Street, Braddon 3,072 8/10/2020

4 Department of Agriculture, Water and the Environment, ‘Who we are’,

viewed July 2020.

5 Department of Agriculture, Water and the Environment, Submission 1, p. 4.

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Source: Department of Agriculture, Water and the Environment, Submission 1, p. 6.

2.10 With regards to the Department’s commitment to its lease on the John Gorton Building, the Department stated that:

Prior to the MOG changes in February 2020, the then Department of Environment and Energy had committed to a lease of 35,710 square meters in the John Gorton Building (JGB) in Parkes to accommodate approximately 1,500 staff. That lease expires in 2035. This current [agreement for lease] proposal for [Civic Quarter 2] will not impact the JGB lease.6

2.11 In their inquiry submission, the Department stated that the need for the work ‘is a direct result of lease negotiations triggered by the upcoming October 2022 expiry of the Department’s two main Canberra leases. There are no existing buildings in Canberra available within the timeframe which can provide the required 32,000 - 33,000 square metres of office space.’7

2.12 The Department told the Committee that the purpose of the works is to ‘relocate AWE's civic operations to a new building fitted out to the Department's new workplace objectives’, providing ‘significant operational benefits by avoiding a prolonged and disruptive refit of the existing premises.’8

2.13 The proposed new workplace at Civic Quarter 2 will result in a reduction in leased space of approximately 7,000 square meters, inclusive of the 3,072 square meters at the Mort Street site that is currently being progressively vacated to enable termination of the lease on 8 June 2020.9

Options considered

2.14 At the public hearing the Department told the Committee that:

The Department commenced consideration of its future accommodation requirements more than 18 months ago in line with the advice of the Commonwealth Strategic Property Adviser and recognising the need for changes in the workplace to provide more contemporary office accommodation for staff, further enabling flexibility and choice in the workplace. Early discussions about future requirements and lease renewals

6 Department of Agriculture, Water and the Environment, Submission 1, p. 4.

7 Department of Agriculture, Water and the Environment, Submission 1, p. 9.

8 Department of Agriculture, Water and the Environment, Submission 1, p. 6.

9 Department of Agriculture, Water and the Environment, Submission 1, p. 5.

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ahead of the lease option period with our existing landlord were unfruitful, leading to an approach to market, and a consideration then of a number of alternatives and, ultimately, the successful conclusion of negotiations with the developer of the [Civic Quarter 2] CQ2 building.10

2.15 The Department noted that as part of its consultation with the Department of Finance, consideration was given to identifying ‘the availability of existing Commonwealth leases which might be large enough to meet the Department’s requirements’; however no suitable sites were identified.11

2.16 The Department stated that it ‘considered the feasibility of relocating the Head Office operations to a regional centre’, however, due to a range of factors, it deemed the option unviable.12 The Department also noted that ‘the economic cost of a development and relocation to a regional centre would be equal to or higher than Canberra.’13

Scope of the works

2.17 The proposed office fitout at Civic Quarter 2 (CQ2), 70 Northbourne Avenue, Canberra City, will comprise part of the ground floor and all of levels 2 to 12, with plant rooms on Levels 1 and 12.14

2.18 In their submission, the Department stated that:

The average office floor plate size is approximately 3,349 square metres with a central atrium extending from ground to roof level. The total ground floor comprises an NLA of 3,001 square metres of which the Department leases 697 square metres for a business centre and security room. The remainder is retained by the landlord for retail uses such as a café. The building also provides 145 square metres of basement storage, basement parking for 172 vehicles and bicycle parking for 200 bicycles.15

2.19 The Department stated in their submission that the fitout works include:

10 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 5.

11 Department of Agriculture, Water and the Environment, Submission 1, p. 10.

12 Department of Agriculture, Water and the Environment, Submission 1, p. 12.

13 Department of Agriculture, Water and the Environment, Submission 1, p. 12.

14 Department of Agriculture, Water and the Environment, Submission 1, p. 13.

15 Department of Agriculture, Water and the Environment, Submission 1, p. 13.

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 integration of services into the base building works including electrical, air-conditioning ventilation, lighting control, voice and data communications, audio visual equipment, security, fire and hydraulic services

 office accommodation including partitioning for individual offices, meeting and conference rooms, reception areas, utility and storerooms, secure rooms, training rooms, break-out and staff amenities and communication equipment rooms

 workstations including desks, team storage units and personal lockers

 loose furniture16

2.20 As part of the fitout works, the Department noted that the office accommodation will include:

 an executive suite for the Secretary and Deputy Secretaries  allocated offices for Senior Executive Service (SES) officers only (designed for alternate uses such as meeting rooms)  open plan office accommodation for Executive Level (EL)1 and 2 and

APS Level officers (workstations to be rectilinear 1,800mm wide with electronic sit/stand height adjustability)  on floor breakout/hub areas and kitchens designed to encourage casual meetings and periods of relaxation  a range of meeting and focus room types of varied sizes, along with a

variety of collaboration zones, and a dedicated secure meeting zone  mail room, equipment, storage and resource areas  parent, carers, first aid and reflection rooms17

2.21 In their submission, the Department stated that the new building allows for a single security and reception facility in the ground floor lobby with speed stiles restricting access to the lift lobby.18

2.22 The building will also be provided with eight passenger lifts, one being a goods lift, servicing all twelve levels of the building, with the two basement levels serviced by four lifts.19

16 Department of Agriculture, Water and the Environment, Submission 1, p. 15.

17 Department of Agriculture, Water and the Environment, Submission 1, pp. 15-16.

18 Department of Agriculture, Water and the Environment, Submission 1, p. 19.

19 Department of Agriculture, Water and the Environment, Submission 1, p. 19.

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Staff consultation

2.23 At the public hearing the Department told the Committee that:

We've got a lot of learnings through a process that we deployed for the pilot around helping people raise concerns, receive information, provide comments and be part of the conversation to work together to decide how to work in the spaces together. Taking those learnings and applying them to this context, we want to make sure we're considering, particularly given COVID, people's level of comfort and preference for when we have those types of conversations face to face, using digital channels or a hybrid of both of those. But our fundamental principle is that this is going to be very people centred. We will be making sure that we have representatives from all parts of the department to be part of the process and then when we're making information available to others we'll arrange different channels to support different times of day and different preferences in how they receive the information.20

2.24 In its submission to the inquiry, the Department stated that staff were ‘positive about the ABW environment’ after the pilot study.21

2.25 The Department provided details from its pilot via correspondence and during an in-camera hearing.

2.26 At the public hearing the Department stated that:

The department is in the process of establishing new committees on the basis of the new organisation. They will involve staff, their representatives and their departments.22

2.27 When asked who selected the staff that had already been involved in discussions, the Department told the Committee that there had been calls for nominations from managers who had selected the staff representatives.23

20 Ms Katherine Divett, Change Management of Communications Lead, Puzzle Partners, Transcript of

Evidence, p. 9.

21 Department of Agriculture, Water and the Environment, Submission 1, p. 29.

22 Mr Neal Mason, Chief People Officer, People Division, Department of Agriculture, Water and the

Environment, Transcript of Evidence, p. 10.

23 Mr Neal Mason, Chief People Officer, People Division, Department of Agriculture, Water and the

Environment, Transcript of Evidence, p. 10.

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Engagement with the Community and Public Sector Union

2.28 In its submission to the inquiry the Community and Public Sector Union (CPSU) told the Committee that it had ‘a number of concerns regarding the apparently failure to eliminate or minimise a number of Work Health and Safety(WHS) hazards in the design on the new building’.24

2.29 The concerns raised by the CPSU included the lack of consideration of COVID-19 and the proposed use of hot desking. The CPSU explained:

CPSU members are concerned that the building is designed with hot desking as a major part of the design. The main concern about this is in terms of WHS, particularly considering the ongoing COVID-19 pandemic. The proposed allocated square metres per person is substantially less than current practice and will make physical distancing more difficult to achieve.

As a direct result of COVID-19 there is a renewed emphasis in phasing out hot desking in office environments as an outdated and unsafe work practice. The advice from Safe Work Australia is that hot desking is to be minimised where possible.25

2.30 At the public hearing the CPSU told the Committee that ‘despite requests, departmental management have declined to have CPSU representatives on their accommodation committee’, and that the CPSU ‘understands that health and safety representatives have not been consulted as part of the workplace design.’26

2.31 The Department told the Committee while the current proposal was to move to an activity based working model, the new fitout would have ‘the same number of work points—and by that I mean desks—in the new building as we do in the current Marcus Clarke and London Circuit buildings combined.’27

2.32 When asked by the Committee if staff would be required to pack up their desk at the end of the day, the Department responded that it had not

24 Community and Public Sector Union, Submission 2, p. 1.

25 Community and Public Sector Union, Submission 2, p. 2.

26 Mc Madeline Northam, ACT Regional Secretary, CPSU, Transcript of Evidence, p. 1.

27 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 6.

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finalised the detailed design, however it ‘imagine[d], in the environment we are in now, no.’28

2.33 The Department further stated that:

For those people who need to be in the office, [activity based working] provide the appropriate workspace they need. For those who come into the office for collaborative purposes or for team meetings or seminars or learning and development, it would provide a space for that as well. In our minds, activity based working is an architectural solution that provides the ultimate flexibility. We are not designing a workplace where we expect people will move from desk to desk every day they come in.29

2.34 At the public hearing the Department told the Committee that it was in the process of establishing a range of national and local consultative committees of which the CPSU would be included in at the local level.30

2.35 With regards to arrangements that have been put in place regarding COVID-19 the Department stated that:

Throughout the course of the pandemic response we've learnt a lot about our workforce, about technology and about property capabilities—all of that will be incorporated into our new building and future workforce strategy. There's still a lot to learn. There will still be a substantial amount of research to be done, but flexibility will continue to be the key for the organisation moving to whatever becomes the new normal. We will be working differently and we will incorporate that into our new building. The design of the new building, in particular a large floor [inaudible], provides us with the ultimate flexibility to meet a variety of working styles, health and safety scenarios and business outcomes.31

2.36 When asked about the working accommodation requirements for staff the Department told the Committee that ‘15 to 20 per cent of staff [had] flexible

28 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 8.

29 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 8.

30 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 10.

31 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 6.

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work arrangements in place pre COVID’32 , through the Department’s flexible working policy. As a result of 80 to 85 per cent of staff working from home due to COVID-19, the Department told the Committee that ‘given the learnings and the experience we've had during COVID we will now revisit that policy’.33

Cost of the works

2.37 Department of Agriculture, Water and the Environment Proposed Fitout of New Leased Premises Canberra has an estimated cost of $78 million, exclusive of GST.34

2.38 The Department provided further details on project costings in its confidential submission and during an in-camera hearing.

2.39 In its submission, the Department noted that:

In assessing the options available, the Department undertook a whole-of-life cost assessment and determined that the proposed development provides a good value for money property solution. The [cost benefit analysis] provided to Finance and the Strategic Property Advisor examined the economic feasibility of the [Agreement for Lease] proposal and confirmed that it provides the best value for money solution.35

2.40 The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.

2.41 The Department attributed the estimated cost of $2,274 per square meter ‘to the higher density proposed for the building, which requires a larger number of work points together with the associated increase in capacity required for air conditioning, power and data to support the higher density.’36

32 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 6.

33 Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment,

Transcript of Evidence, p. 6.

34 Department of Agriculture, Water and the Environment, Submission 1, p. 29.

35 Department of Agriculture, Water and the Environment, Submission 1, p. 29.

36 Department of Agriculture, Water and the Environment, Submission 1, p. 29.

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Revenue

2.42 There will be no direct revenue generated by the project.37

Committee comment

2.43 The 2019 machinery of government (MOG) changes consolidated the Department of Agriculture and the environment functions from the Department of the Environment and Energy. This resulted in the Department’s civic operations being spread across three separate buildings within the city of Canberra. The Committee recognises the upcoming lease expiry of the three current locations provides a good opportunity for the Department to collocate its civic operations into one building. Additionally, this opportunity provides the Department with a greater ability to accommodate future staff number fluctuations and re-organisations that may results from future MOGs or similar events.

2.44 The Committee was encouraged to see that the proposal aims to reduce the Department’s average workpoint density. However, it was concerned by the Department’s aspiration to achieve a density of ‘between 8 and 10 square meters per person’.38 This is well below the current Department of Finance target of 14 meters square. The Committee does not consider the need to reduce space below the density target a priority over the safety and comfort of staff.

2.45 The lack of input from departmental staff regarding the fitout design prior to the inquiry hearing was of concern to the Committee. While the Committee notes that the fitout design had not yet been finalised, it was concerned that the staff consultation process had begun too late in the design process and staff had not been consulted from the outset. The Committee encourages the Department to continue to engage openly with staff throughout the design and construction stages to ensure that any staff concerns are taken on board and their needs accommodated.

2.46 The Committee was disappointed with the Department’s lack of engagement with the CPSU prior to the public hearing and would like to see

37 Department of Agriculture, Water and the Environment, Submission 1, p. 31.

38 Department of Agriculture, Water and the Environment, Submission 1, pp.4-5.

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departments prioritise engagement with relevant unions and staff representatives when commencing office fitout projects. The Committee encourages the Department to work closely with the CPSU from this point onward to ensure that the concerns raised by CPSU members are adequately addressed.

2.47 The Committee was pleased to hear that the Department had considered the changing needs of staff during the COVID-19 pandemic and was working towards a flexible design that could accommodate future changes to workplace practices. The Committee encourages the Department to seek feedback from staff on new and more flexible ways of working that have emerged during the pandemic that could be permanently incorporated into the workplace.

2.48 The Committee acknowledges the tight project schedule, however was concerned that due to the preliminary state of the fitout design, the Committee was not able to fully scrutinise the finalised design. The Committee encourages departments to engage with the Public Works Committee process when project designs are further developed and staff have had the opportunity to provide feedback and input.

2.49 Due to the preliminary state of the fitout design and the lack of staff input into the final design, the Committee is seeking six monthly reports throughout the design and construction phases of the project. This will enable the Committee to remain informed of any changes in design, scope or cost to the project. Additionally, as the project is the first office fitout scrutinised by the Committee during the COVID-19 pandemic, the Committee is keen to keep up-to-date with any ongoing changes to office accommodation that can be implemented across the broader public sector.

Recommendation 1

2.50 The Committee recommends that Department of Agriculture, Water and the Environment report back to the Public Works Committee with six monthly written updates until the completion of the works.

2.51 Updates to the Committee should contain detail on the consultation process, progress of the final design and any changes to scope and cost.

2.52 Having regard to its role and responsibilities contained in the Public Works Committee Act 1969, and bearing in mind the current lease expiry date, the

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Committee is of the view that this project is fit for purpose, having regard to the established need.

Recommendation 2

2.53 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: Department of Agriculture, Water and the Environment Proposed Fitout of New Leased Premises at Block 34, Section 26, Canberra City, ACT.

2.54 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

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A. List of Submissions

Department of Agriculture, Water and the Environment Proposed Fitout of New Leased Premises Canberra

1 Department of Agriculture, Water and the Environment

 1.1 Confidential

2 Community and Public Sector Union

17

B. List of Public Hearings and Witnesses

Department of Agriculture, Water and the Environment Proposed Fitout of New Leased Premises Canberra

Thursday, 2 July 2020 - via Teleconference

Department of Agriculture, Water and the Environment

Ms Cindy Briscoe, Deputy Secretary, Department of Agriculture, Water and the Environment

Mr Lionel Riley, A/g First Assistant Secretary, Corporate and Business Services Division, Department of Agriculture, Water and the Environment

Mr Scott Brown, First Assistant Secretary, Chief Finance Officer, Department of Agriculture, Water and the Environment

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Mr Peter Moore, A/g Assistant Secretary, Security & Commercial Business Branch, Department of Agriculture, Water and the Environment

Mr Neal Mason, Chief People Officer, People Division, Department of Agriculture, Water and the Environment

Mr Paul Wilkin, Tenant Advocate, Department of Agriculture, Water and the Environment

Mr Mitchell Flynn, Senior Project Manager, Consica

Ms Katherine Divett, Change Management and Communications Lead, Puzzle Partners

Mr James Osenton, National Director, WT Partnership

Community and Public Sector Union

Ms Madeline Northam, ACT Regional Secretary, Community & Public Sector Union

Mr Paul Girdler, Lead Organiser, Community & Public Sector Union