The Nishi Building in New Acton, home to the Department of Climate Change.

The Nishi Building in New Acton, home to the Department of Climate Change. Photo: Jeffrey Chan

Embattled staff at the Climate Change Department may not have to move out of their plush surrounds at the Nishi complex at Acton as their department effectively disappears.

The Government is merging the majority of functions of the Department of Climate Change and Energy Efficiency with the Department of Industry, and will become the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education.

The 740 staff at Climate Change are housed in the building boasting a ''6 green star, energy efficient'' design, at a cost of $10 million a year.

The Opposition has previously vowed to abolish the department if Tony Abbott wins the federal election in September.

Greg Combet, the Minister for Climate Change, Industry and Innovation, was asked on Monday to indicate what would happen to the space leased by Climate Change.

His spokesman said accommodation arrangements were a matter for departmental management.

''This and a range of other issues will be considered in the coming days,'' the spokesman said.

Later he added: "There are no plans to move climate change policy staff out of the Nishi building".

One option would be for the name plate for the leased space will be changed, and staff continue working there, as part of the larger department.

Opposition climate action spokesman Greg Hunt told Fairfax Media earlier this month an incoming Coalition government might sack staff from the doomed Climate Change Department if they refuse to take redundancies.

The subsequent surplus office space in the Nishi building could be sub-let or the Coalition might cancel the department's 15-year, $158 million lease.

Mr Hunt said the proposed merger would result in job reductions.

In a statement justifying the merger of the departments, Mr Combet said a significant number of Climate Change Department staff moved to the Clean Energy Regulator when it was established last year.

''The detailed policy design work and legislation for the carbon price has now been completed and the carbon price is being implemented successfully,'' he said.

''The Government has also established the Climate Commission as an independent and reliable source of information about the science of climate change, the Climate Change Authority to advise on emissions targets and the Clean Energy Regulator to administer the carbon price.

''Accordingly the government has decided that a separate department is no longer required for this policy work."

It was reported last week that an argument over payments at the development is close to resolution, according to the administrator appointed to sort out the financial collapse.

There has been much speculation as to why the chief building contractor for the project, Ply, called in an administrator several weeks ago, with between $4 million and $5 million owing to other contractors.

Nishi residential, a joint venture between Sydney-based Brick Top and Canberra's Molonglo, is among several multimillion-dollar projects at Acton.

- with Chris Johnson