Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Public Works—Parliamentary Standing Committee—1st report of 2020—Referral made November 2019


Download PDF Download PDF

March 2020 CANBERRA

PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

Report 1 2020

Referral made November 2019

Parliamentary Standing Committee on Public Works

© Commonwealth of Australia

ISBN 978-1-76092-084-5 (Printed Version)

ISBN 978-1-76092-085-2 (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/.

iii

Contents

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

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

The Report

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

Structure of the report .......................................................................................................... 2

2 Reserve Bank of Australia, Head Office Workplace Project .......................... 3

Conduct of the inquiry ......................................................................................................... 3

Need for the works ............................................................................................................... 3

Options considered ............................................................................................................... 5

Scope of the works ................................................................................................................ 7

Consultation process............................................................................................................. 8

Heritage protection ............................................................................................................... 8

Risk management .................................................................................................................. 9

Cost of the works................................................................................................................. 10

Revenue ................................................................................................................................ 11

Committee comment .......................................................................................................... 11

Appendix A. List of Submissions .................................................................................. 13

Appendix B. List of Public Hearings and Witnesses ................................................. 15

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 Kristy Altieri

vii

List of Recommendations

Recommendation 1

2.47 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: Reserve Bank of Australia, Head Office Workplace Project.

1

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;  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);

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).

2Public Works Committee Act 1969, 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.

2 REPORT 1 2020

 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.3

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 agency, including submissions and evidence received at the 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 Reserve Bank of Australia - Head Office Workplace Project, New South Wales. The estimated cost of this project is $259.7 million (excluding GST).

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

3 The Act, Part III, Section 17(3).

3

2. Reserve Bank of Australia, Head Office Workplace Project

2.1 The Reserve Bank of Australia seeks approval from the Committee to proceed with the proposed refurbishment of the Reserve Bank’s Head Office building at 65 Martin Place, Sydney NSW. The aim of the project is to prepare the Head Office building for the Bank’s next 25 years of occupancy by ensuring the building is structurally, functionally and operationally viable over the long term.1

2.2 The estimated cost of the project is $259.7 million (excluding GST).

2.3 The project was referred to the Committee on 27 November 2019.

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 one submission and one confidential submission. A list of submissions can be found at Appendix A.

2.6 On 14 February 2020, the Committee conducted a site inspection, public and in-camera hearing in Sydney, New South Wales. A transcript of the public hearing is available on the Committee’s website.

Need for the works

1 Reserve Bank of Australia, Submission 1, p. 5.

4 REPORT 1 2020

2.7 The Reserve Bank of Australia (RBA) is established by statute as Australia’s central bank, and its enabling legislation is the Reserve Bank Act 1959 (the Act). The RBA is a Commonwealth statutory authority operating within the Public Governance, Performance and Accountability Act 2013 (PGPA Act).2

2.8 The RBA acts as a banker to the Australian Government and plays a number of important roles, including; contributing to the stability of the Australian currency, driving full employment and ensuring the economic prosperity and welfare of the Australian people.3

2.9 The RBA’s Head Office building at 65 Martin Place, Sydney NSW, was purpose built in 1964 on Crown Land, and has been continuously occupied by the RBA since that time. In its submission to the Committee, the RBA stated that:

It is a unique building by virtue not only of its heritage value but also its highly secure function which is supported by an armed guard force, purpose built bank vaults, a data centre running national payments infrastructure, and valuable archives. The majority of the RBA’s staff (1,230 or 90 per cent of the RBA’s current 1,371 employees) and key functions operate out of the Head Office building.4

2.10 The RBA wrote in their submission that ‘the majority of the central plant and associated infrastructure in the Head Office building has now reached the end of its useful life’ and needs to be upgraded.

2.11 In addition, the RBA stated:

While the ongoing base building maintenance and fitout initiatives have complied with the standards of the day and have achieved a satisfactory work environment, some building services have fallen behind current compliance and sustainability standards, and material improvements are now required.5

2.12 The RBA told the Committee that it is necessary to undertake a full building upgrade in order to realign with current codes of compliance, including the National Construction Code 2019 (NCC). The RBA stated that ‘this will ensure the safety of staff and other building occupants by addressing items such as non-laminated float glass, basement fire stair configurations and

2 Reserve Bank of Australia, Submission 1, p. 7.

3 Reserve Bank of Australia, Submission 1, p. 5.

4 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 1.

5 Reserve Bank of Australia, Submission 1, p. 9.

RESERVE BANK OF AUSTRALIA, HEAD OFFICE WORKPLACE PROJECT 5

building structure. It will also extend the life of the building for future generations, and assist to preserve its iconic status and the critical functions the Bank performs for the Australian community’.6

Options considered

2.13 At the public hearing, the RBA told the Committee that as a result of the review process it ‘settled on a whole-of-building approach’ with three broad options:

1 Sell the Martin Place land, purchase another site in the CBD, and construct a purpose building. Estimated at approximately $450 million

2 Renovate the existing building by temporarily relocating the RBA to another site. Estimated at approximately $500 million

3 Renovate and stay in situ while the renovations are conducted. Estimated at approximately $260 million7

2.14 The RBA told the Committee that the third option was preferred due to being the most cost effective.8

2.15 In its submission, the RBA noted that while it recognised that the RBA ‘could sell and lease or build a new facility, this approach was not pursued due to the advantages of retaining the existing Head Office building’.9 The advantages include:

 As the building’s heritage classification is closely linked to its function as Australia’s central bank, retaining ownership will provide the best opportunity to preserve its rich heritage;

 A number of the Bank’s highly specialised functions integrated into the building, including high-security banknote storage, data centre, archives storage and currency museum, would be cost prohibitive to relocate and replicate in another building;

 Under the Act, the Bank is required to be located in Sydney; and

6 Reserve Bank of Australia, Submission 1, pp. 9-10.

7 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 2.

8 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 2.

9 Reserve Bank of Australia, Submission 1, p. 11.

6 REPORT 1 2020

 As a comparative cost assessment, selling and leasing or constructing a new facility offered the least favourable value for money option over the long-term with costs far in excess of the options to upgrade the existing building10

2.16 The RBA considered three options with varying levels of structural intervention to the existing building:

 Option 1 - Retain Core

 Retain the existing building core and main passenger lift locations

 Total building NLA of approximately 24,555m2 (3 per cent less than existing)

 No spare space

 Completion expected October 2025

 Capital construction cost is $244.6 million  Option 2 - Hybrid Core

 New external services core to the south with existing lift locations retained

 Total building NLA of approximately 28,290m2 (11 per cent more than existing)

 Up to two floors of spare space

 Completion expected July 2025

 Capital construction cost is $259.7 million  Option 3 - New External Core

 New external core to the south including lifts (existing core -including lifts - to be demolished)

 Total building NLA of approximately 30,065m2 (18 per cent more than existing)

 Four floors of spare space

 Temporary relocation of 350 staff and basement 3 archives offsite for two years during demolition works adjacent to Mezzanine, Level 1 and Level 2

 Completion expected November 2025

 Capital construction cost is $327.0 million11

2.17 All options were reviewed and Option 2 was selected as it delivers the least disruptive solution with the least risk to the RBA’s operations during

10 Reserve Bank of Australia, Submission 1, pp. 11-12.

11 Reserve Bank of Australia, Submission 1, p. 13.

RESERVE BANK OF AUSTRALIA, HEAD OFFICE WORKPLACE PROJECT 7

construction and is capable of retaining the significant heritage values of the building. The RBA told that Committee that ‘on balance, addressing disruption and risk to operations and the importance of retaining the RBA’s heritage were deemed to be the more important factors’.12

Scope of the works

2.18 The proposed scope of the RBA’s Head Office Workplace Project comprises five key elements and includes:

1 New external services core - including mechanical and electrical plant and equipment, services risers, fire stairs, toilet facilities and a goods lift

2 Rationalisation and renewal of central plant - the majority of the main plant and equipment is at the end of life, or no longer compliant, so will be replaced with new. Where possible existing central plant will be retained

3 Facade window glass replacement - the windows will be replaced to meet current safety and energy efficiency standards

4 A contemporary fitout that supports flexible work practices to meet the functional needs of the Bank. This includes:

a. Improving the ratio of meeting rooms, breakout and collaboration spaces to better meet the needs of the current and future workforce

b. Connecting up to 10 floors by a series of internal staircases to encourage greater connection between departments

c. Increasing its occupational work point densities to achieve the Government’s target of 14 square meters per occupied work point

d. Centralised staff support floor (cafeteria, service centre, multi-use training rooms, library and a variety of staff support spaces). Conferencing will also be provided in a new facility on Ground Floor for meetings with visitors and an upgrade of the existing conferencing space Level 20 for staff and visitors

5 New shuttle lifts - Replacing two lifts servicing the high rise floors, Levels 16 to 20, which are at end of life13

2.19 At the public hearing the RBA stated that one of its key intentions was to meet accessibility standards within the limits of the heritage constraints of

12 Reserve Bank of Australia, Submission 1, p. 14.

13 Reserve Bank of Australia, Submission 1, pp. 16-17.

8 REPORT 1 2020

the building, and had a ‘DDA consultant on the design team to assist with making sure that we do meet the accessibility codes’.14

Consultation process

2.20 The RBA told the Committee that it had been through the standard consultation process prior to the hearing which included providing a briefing to the City of Sydney Council, discussing the heritage aspects of the proposal with the Department of Environment and Energy, and meeting with the Hyde Park Barracks ‘to explain the impact to the barracks’. The RBA stated that all of the briefed parties were supportive of the project and did not have any issues with the proposal.15

2.21 The RBA highlighted that it had offered a briefing to neighbouring businesses, letterboxing an area of 75 meters from the Martin Place property, of which no one attended. Additionally, the RBA told the Committee that one neighbour enquired directly regarding the impact of the noise and vibration during the construction phase, and was ‘satisfied that the nature of the works wasn’t going to impact their operations’.16

2.22 At the public hearing, the RBA stated that on the whole staff were feeling very positive about the proposal. They further noted that they had consulted with the union, which was supportive of the change.17

Heritage protection

2.23 The RBA stated in their submission that the Head Office building has national heritage significance, as ‘a representative example of a prestige post-war government office building and is the work of the Commonwealth Department of Works’.18

14 Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia, Transcript of Evidence, 14

February 2020, p. 7.

15 Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia, Transcript of Evidence, 14

February 2020, p. 2.

16 Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia, Transcript of Evidence, 14

February 2020, p. 2.

17 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 9.

18 Reserve Bank of Australia, Submission 1, p. 8.

RESERVE BANK OF AUSTRALIA, HEAD OFFICE WORKPLACE PROJECT 9

2.24 The RBA noted that the Head Office building at Martin Place ‘is included as a heritage item (Place ID: 105456) on the Commonwealth Heritage List,’ and ‘the RBA maintains a Heritage Management Plan for the building in accordance with legislative requirements’.19

2.25 The site is also listed as an item of local heritage significance on Schedule 5 of the Sydney Local Environmental Plan 2012 as ‘Reserve Bank including interior’ (item no. I1897).20

2.26 At the public hearing the RBA told the Committee:

…the RBA’s ‘ongoing heritage management plan… is a key input into the design of this project,’ and stated that it will continue to work with the appointed heritage consultant as it further developed the design.21

2.27 The RBA stated in their submission that the Bank’s Heritage Management Plan requires the retention of the exterior façade, Ground Floor foyer, Governors and Board areas, and other areas with exceptional and significant heritage value.22 In addition, the RBA stated that ‘…artworks and movable heritage furniture will be unaffected by the proposed works’.23

Risk management

2.28 At the public hearing, the RBA told the Committee that the project does pose a number of risks, including the construction risks, risk of reduced resilience’s through the construction period, the risk of losing physical or information assets, and the potential adverse effects on staff.24

2.29 The RBA stated that it would:

19 Reserve Bank of Australia, Submission 1, pp. 8-9.

20 Reserve Bank of Australia, Submission 1, p. 9.

21 Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia, Transcript of Evidence, 14

February 2020, p. 7.

22 Reserve Bank of Australia, Submission 1, p. 17.

23 Reserve Bank of Australia, Submission 1, p. 23.

24 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 2.

10 REPORT 1 2020

…be carefully managing those risks, both through the governance framework…and by using the business-as-usual governance arrangement that the bank has in place to support the day-to-day running of the bank.25

2.30 When questioned about the management of asbestos risks during construction, the RBA stated that due to a major asbestos removal project in the nineties most asbestos had been removed from the building ‘except for some known and difficult to get to places, mainly on the outside of the building in the façade.’ The RBA told the Committee that it was aware of some asbestos behind some electrical distribution boards, which it would be able to sensibly remove.26

2.31 The RBA highlighted that it had an asbestos register that would be provided to contractors, and an asbestos management plan in place which requires any asbestos to be reported to the RBA, tested and contained prior to the recommencement of construction.27

Cost of the works

2.32 Reserve Bank of Australia, Head Office Workplace Project has an estimated cost of $259.7 million, exclusive of GST.28

2.33 AT the public hearing the RBA stated that approximately $180 million of the total cost is attributed to the base building works which it stated was ‘an investment in the base building to continue the life of that building. Without that investment every 25 to 30 years, you would have to knock the building down.’29

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

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

25 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 2.

26 Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia, Transcript of Evidence, 14

February 2020, p. 6.

27 Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia, Transcript of Evidence, 14

February 2020, p. 6.

28 Reserve Bank of Australia, Submission 1, p. 25.

29 Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia, Transcript of Evidence, 14

February 2020, p. 5.

RESERVE BANK OF AUSTRALIA, HEAD OFFICE WORKPLACE PROJECT 11

Revenue

2.36 The RBA told the Committee that an estimated 2,000 square meters of office space is expected to be vacant on levels 17 East and 19 East which may be rented out to the market on commercial terms if identified as being surplus to the RBAs needs.30

2.37 At the public hearing the RBA stated that currently and historically the RBA had been leasing two floors of the building to barristers, and was currently keeping its options open regarding future needs of the Bank.31

2.38 In response to being asked if subleasing to outside tenants added to the RBA’s security costs, the RBA stated that it did not believe so as it already has an armed guard force and barriers at the entry to the building, and vetted people prior to issuing building security cards.32

Committee comment

2.39 The Committee was pleased to note the high level of detail provided by the RBA, both its submissions to the inquiry, and at the public and in-camera hearings.

2.40 With regards to the consultation process, the Committee commends the RBA on its thoroughness, and was pleased to see the incorporation of staff feedback in the proposed design for the floorplan.

2.41 The Committee notes that under the Reserve Bank Act 1959, the core functions of the RBA are required to be located in Sydney, and appreciates the benefits surrounding the RBA’s continued presence in Sydney’s financial district.

2.42 During the site inspection, the Committee noted the poor state of a number of items cited for replacement in the proposed works, including the leaking windows and inadequate insulation.

2.43 In combination with the unique heritage value and the specialised areas within the building, which include the secure banknote storage and secure

30 Reserve Bank of Australia, Submission 1, p. 24.

31 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 3.

32 Ms Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia, Transcript of

Evidence, 14 February 2020, p. 3.

12 REPORT 1 2020

data centre, the Committee appreciates it is impractical to permanently relocate the Head Office building to another site within Sydney.

2.44 The Committee is also pleased to note that the cost of the proposed works will be funded by the RBA.33

2.45 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.

2.46 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 1

2.47 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: Reserve Bank of Australia, Head Office Workplace Project.

2.48 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.

33 Reserve Bank of Australia, Submission 1, p. 5.

13

A. List of Submissions

Reserve Bank of Australia, Head Office Workplace Project

1 Reserve Bank of Australia

 1.1 Confidential

15

B. List of Public Hearings and Witnesses

Reserve Bank of Australia, Head Office Workplace Project

Friday, 14 February 2020 - Sydney

Reserve Bank of Australia

Mrs Susan Woods, Assistant Governor, Corporate Services, Reserve Bank of Australia

Mr Ed Jacka, Deputy Head, Workplace, Reserve Bank of Australia

Mr Michael Andersen, Head, Human Resources, Reserve Bank of Australia