National

Cost revealed: $376 million state-of-the-art offices for Finance Department

Taxpayers will fork out nearly $376 million for a new state-of-the-art public service office building in Canberra while continuing to pay rent for acres of empty office space around the capital.

Department Secretary Jane Halton may join her workforce and shell out cash for parking.
Department Secretary Jane Halton may join her workforce and shell out cash for parking. Photo: Alex Ellinghausen

The true cost of the Finance Department's lease on its new offices at 1 Canberra Avenue has been revealed and, according to the government's contracting website AusTender, it's more than $156 million greater than previously disclosed.

The department is the one tasked with getting the federal government's empty office space problem under control, with 34,000 desks sitting idle in public service buildings around Australia and 17,000 in the national capital.

Two Labor senators on a committee that examined the lease arrangement in 2015 have told Fairfax that they were never told the building would cost $376 million over 20 years.

The 20-year deal, worth about $19 million a year to Willemsen Investment Corporation, was ticked off by Finance Minister Mathias Cormann, whose party came to power promising to "end the waste".

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Having signed the lease on the 20,000 square metres building that comes with 500 car parking spaces, Finance is now looking to design an in-house gym for the block.

When the department persuaded Parliament's cross-party public works committee last year to give its approval to a key aspect of the move, it submitted a cost figure based on "net present value" of $194 million for renting 1 Canberra Avenue from 2014 to 2038.

The public works committee was only empowered to examine the $32 million fit-out of the building, which is being paid for by Willemsen as a sweetener to the deal, and not the lease itself.

But senators and MPs were skeptical of Finance's insistence that the property deal was good value for money for the taxpayer and the department had to work hard to make its case that 1 Canberra Avenue was a good financial option.

Eventually, influential department secretary Jane Halton was forced to intervene to persuade the public works committee to sign off on the fit-out.

But committee members, Labor senators Alex Gallacher and Joanne Ryan, have told Fairfax that the figure of $376 million was news to them.

"I have no recollection of hearing that figure, either in the public hearings that were held or in the closed sessions either," Senator Gallacher said.

The politician who led much of the questioning of the real estate deal, Queensland Senator Matt Canavan, who has since been elevated to the outer ministry, did not respond to questions.

The Finance Department also failed to answer why the committee was not told of the whole cost of the building or what advice was sought or obtained before signing the lease.

Finance is the department charged with getting the government's empty real estate problem under control

But the task is huge, according to the Australian Government Office Occupancy Report, with 2.38 million square metres of offices currently held on leases around the country and 21 per cent of it sitting vacant.

There were 158,315 "work points" in those buildings but just 124,315 of them were occupied and about 17,000 of those empty desks are in Canberra.

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